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Strategy

Thai Smile will get out of the low cost model

Luc Citrinot - 18 March 2013, 08:49

Thai Airways subsidiary Thai Smile is radically revising its strategy to become a full –albeit simplified- service airline…

BANGKOK - It did not take to long for Thai Airways International to realize that the Thai Smile concept was maybe difficult to implement in an already crowded market. Announced in November 2011, the carrier was first seen as a replacement to the aborted joint venture with Singaporean Tiger Airways to create a low cost/low fare carrier. At the time of its start off, Thai Smile mission was already different: the airline was due to be a lower fare alternative for Thai Airways on domestic and regional routes, where low cost competition was already intense.

In July 2012, Thai Smile started its operation with flights from Bangkok to Macau, Chiang Mai and Phuket. The market has since been expanded to include Krabi, Surat Thani, Ubon Ratchathani and Udon Thani. By the end of March, Thai Smile will also start serving Mandalay out of Bangkok with a daily frequency.

However, as the airline launches its first flights to Myanmar, it will also experience a radical change in strategy. Thai Airways International board of directors agreed at the end of February that Thai Smile would finish with a pure low cost concept. Instead, The carrier’s strategy will now emulate the model of Silk Air in Singapore and Dragonair in Hong Kong. Both carriers – subsidiaries of Singapore Airlines for the first and of Cathay Pacific for the second- are closing a gap in the segment between a full-service carrier and a low cost airline. Both Silk Air and Dragonair propose an onboard simplified service, a fixed business class and affordable fared.

Thai Smile will now go along the same line. From April, the carrier will also offer a fixed business class along with the delivery of its seventh Airbus A320. The revamped strategy will also help Thai Smile to better integrate the chain of services of Star Alliance, to which Thai Airways international belongs. The new product will be marked for connecting flights while more destinations will also be added to neighbouring countries.

Thai Smile envisions to serve before the end of the year Delhi, Kuala Lumpur, Singapore and Chiang Mai out of Phuket but also Bangkok-Siem Reap and possibly Bangkok-Penang. The carrier hopes to have 20 aircraft Airbus A320 by 2015 and become a fully independently operating carrier over the next few months.

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