THAI Smile shifts business model

THAI Smile will undergo yet another twist in direction as it abandons its low-cost image to emulate the business models of Singapore’s Silk Air and Hong Kong’s Dragonair.

The Thai Airways International board will consider turning the operation into a separate company fully owned by the national airline but having separate accounts and management structure.

But for passengers the most visible change will be the introduction of a fixed business class seating arrangement and full on-board service similar to the Silk Air model that should occur over the next two months when the seventh A320 is delivered.

The airline’s top executives have admitted that the light-premium model with a flexible business class arrangement failed to gain customer acceptance.

THAI’s latest fleet plan for its subsidiary has six leased A320s joining the fleet this year giving it 10 aircraft. It will probably lease another five A320s in 2014. All of the new planes will be fitted out with a fixed business class and will used to beef up the airline’s fledging regional network.

By 2015 when the ASEAN Economic Community kicks in the airline should have 20 A320s.

The airline flies to just one international destination Macau, but that will change mid-March when it adds a service to Mandalay in Myanmar.

The move from the low-cost model to a full service airline will make it easier for the airline to market to Star Alliance passengers, who need to connect to domestic services to complete their journey.

Network wise the airline will fly more services to Phuket and Krabi in South Thailand.

It wants to start a service to Singapore from Phuket and fly north to Chiang Mai making the southern island a hub.

However, it also plans to add more services to Krabi, which is less than 150 km from Phuket. The airport is served by 14 daily flights offered by five airlines including AirAsia out of Kuala Lumpur and Tiger Airways out of Singapore.

The arrival of THAI Smile on domestic routes will ultimately lead to the mother company concentrating on major regional and long-haul routes, leaving the subsidiary to compete on the domestic sector and secondary regional routes.

It has already taken over from THAI on the Krabi route serving the holiday destination with five daily flights. In the long-run THAI Smile will take over all TG’s domestic routes with possibly two exceptions Phuket and Chiang Mai.

THAI Smile’s introduction of a direct Chang Mai-Phuket route competes with Thai AirAsia. In the past TG attempted to establish the route that cuts out a need to stop and change planes in Bangkok, but without success.

Sourced: ttrweekly