'Thai Smile' approved as name of THAI's new low-cost carrier, in operation next year

BANGKOK, Aug 19 - Thai Airways International's executive board (THAI) meeting today approved 'Thai Smile' as the name of the national flaf carrier's lost-cost airline, set to be in operatin in the middle of next year, according to airline president Piyasvasti Amranand.

'Thai Wings' was previously selected but changed, as THAI staff participated in choosing the new name.

Thai Smile will have 11 new aircraft, four of which will be 174-seat Airbus A320s, to be received early next year.

THAI's lowcost business unit managing director Capt Woraneti Lahprabang said the airline will use Suvarnabhumi Airport as its main hub to operate flights to provinces such as Chiang Rai, Surat Thani, Ubon Ratchathani, and Udon Thani.

The unit's airline is expected to start making profits in 2013 of Bt5 billion on average, while it is also to consider opening international flights and indicating routes in the same year.

Personnel for the unit will be from THAI and from THAI's subsidiary companies.

Meanwhile, there has been no progress regarding the setting up of lowcost 'Thai Tiger Airways', an earier proposed joint venture of THAI and Singapore's Tiger Airways. THAI executives consider the matter again at a later date. (MCOT online news)

-- TNA 2011-08-19

Cynical and suspicious.

Thai Airways has a well-established domestic network, albeit faltering and cut-backs have been their worst enemy.

Instead of inventing a "new" airline subsidiary why not take this new found underwriting and put it to better practice - maintaining and retreiving the old and expandeding their dying domestic routes.

Since all national carriers tend to be subsidized by respective governments, why dig yourself into another hole that can't be filled. Their business practices and history should tell you everything you need to know.

whats hiding behind the smile?

THAI's budget carrier to take flight

By WATCHARAPONG THONGRUNG

THE NATION

Thai Airways International |will push ahead with its plan to operate a budget airline, hoping to start service in the middle of next year.

The new airline will be called Thai Smile.

Piyasvasti Amranand, president of the company, said yesterday that the new Thai Smile business unit would have independent management from its parent company.

Woranate Laprabang, executive vice president for strategic and business development of Thai Airways International, has been appointed managing director of the new low-cost airline.

Thai Smile will use the narrow-body Airbus 320, which accommodates 174 seats.

The company aims to have 11 aircraft at the beginning stage, acquired through both leasing and new purchases.

Woranate said delivery of the new aircraft would begin next year to handle domestic flights in the first year of the service. Targeted destinations include Ubon Ratchathani, Udon Thani, Khon Kaen, Chiang Rai and Surat Thani.

Thai Smile also plans to add overseas routes including Asean destinations, China and India in 2013. Domestic and overseas business will be balanced. As a result, the business is forecast to generate Bt5 billion in 2013. Aircrew recruitment will begin late this year, including 30-40 pilots and flight attendants.

Piyasvasti added that the company had insisted on the price of Bt33 per share to purchase Krung Thai Bank's stake in Nok Air. However, there has been no answer from the bank.

Meanwhile, the establishment of another budget airline, Thai Tiger Airways, has made no progress. The company is waiting for guidance from the Finance Ministry as Thai Airways' major shareholder.

-- The Nation 2011-08-20

whats hiding behind the smile?

Same thought occured to me...

Woranate said delivery of the new aircraft would begin next year to handle domestic flights in the first year of the service. Targeted destinations include Ubon Ratchathani, Udon Thani, Khon Kaen, Chiang Rai and Surat Thani.

So that saves TG from having to find buyers, for some of their older planes, as they're replaced in the main fleet.

And also spells out which unprofitable domestic-routes, they plan to stop flying-to, under their main brand-name. Note that the list doesn't include Chiang Mai or Phuket, which would be the obvious destinations, for most new LCCs.

Or am I being cynical ?

Edited August 20, 201115 yr by Ricardo

I always thought that Nok Air was owned by Thai. What will happen there?

They may have missed the boat as Air Asia have many of these routes tied up already and their marketing is very good, though their website becomes more and more difficult to use every time they think of a new extra to charge for.

It seems to me that it's the way to make Thai Airways profitable again, as a previous poster says, taking all the loss-making domestic routes away from the main carrier.

So, now patrons of this "new" airline will be awarded "Air Smiles" instead of Air Miles. Collect 1000 smiles and get a laugh.

Patrons can join the "Smile High Club" and the pilot will announce over the intercom, "We are now traveling at 450 Smiles an hour".

Maybe they should rename it "Thigh High Airlines"?

Woranate said delivery of the new aircraft would begin next year to handle domestic flights in the first year of the service. Targeted destinations include Ubon Ratchathani, Udon Thani, Khon Kaen, Chiang Rai and Surat Thani.

So that saves TG from having to find buyers, for some of their older planes, as they're replaced in the main fleet.

And also spells out which unprofitable domestic-routes, they plan to stop flying-to, under their main brand-name. Note that the list doesn't include Chiang Mai or Phuket, which would be the obvious destinations, for most new LCCs.

Or am I being cynical ?

No, you just can't read. OP clearly states that Thai Smile will receive NEW airplanes. In fact, the reason why the new airline has to wait until about middle of next year before they start operating is that they have to wait for the airplanes.

There are reasons why the small routes are not profitable for TG, and that's why it makes sense to start a completely new airline. And yes, it also is in direct competition to Air Asia, as someone mentioned in another post.

I always thought that Nok Air was owned by Thai. What will happen there?

They may have missed the boat as Air Asia have many of these routes tied up already and their marketing is very good, though their website becomes more and more difficult to use every time they think of a new extra to charge for.

It seems to me that it's the way to make Thai Airways profitable again, as a previous poster says, taking all the loss-making domestic routes away from the main carrier.

Yes, it makes sense to oursource the loss-making routes to another subsidiary which can make profit on these, due to a different set-up. It is also time to seriously compete wiht Air Asia.

The differentiation between Nok Air and Thai Smile is not clear to me though. They have different trarget markets, but I forgot. Maybe it's because I didn't really understand the difference.

So, now patrons of this "new" airline will be awarded "Air Smiles" instead of Air Miles. Collect 1000 smiles and get a laugh.

Patrons can join the "Smile High Club" and the pilot will announce over the intercom, "We are now traveling at 450 Smiles an hour".

Maybe they should rename it "Thigh High Airlines"?

LOL!

I hope I get ROP miles on the new airline, though.

whats hiding behind the smile?

Same thought occured to me...

\

a disaster waiting to happen.

duh if the same organization can not run an ordinary airline why would they think they could run a low cost airline without any knowledge of how to

This makes since for Thai International because it allows them to legally and financially seperate their in-country operations and their international operations.

That allows the two operations to be two seperate financial entitys...seperating any loss making operation from any potential profit making operation...but still under the control of the same parent company.

I am quite certain that with the arrival of new aircraft the in-country operations of Thai Airways (or whatever they call themselves) will be ended and those routes will be transferred to the new Thai Smile airline. With the likely execption of the profitable Phuket and Samui routes, of course.

It all makes perfect sense from a business viewpoint, bet the accountants will love it.

Of course, as always, the key to a profit or a loss is in the management....but that's another story.

So, now patrons of this "new" airline will be awarded "Air Smiles" instead of Air Miles. Collect 1000 smiles and get a laugh.

Patrons can join the "Smile High Club" and the pilot will announce over the intercom, "We are now traveling at 450 Smiles an hour".

Maybe they should rename it "Thigh High Airlines"?

LOL!

I hope I get ROP miles on the new airline, though.

Yes, they already said in a previous article that the new airline would be part of the Royal Orchid program for mileage.

So that saves TG from having to find buyers, for some of their older planes, as they're replaced in the main fleet.

And also spells out which unprofitable domestic-routes, they plan to stop flying-to, under their main brand-name. Note that the list doesn't include Chiang Mai or Phuket, which would be the obvious destinations, for most new LCCs.

Or am I being cynical ?

No, you just can't read. OP clearly states that Thai Smile will receive NEW airplanes. In fact, the reason why the new airline has to wait until about middle of next year before they start operating is that they have to wait for the airplanes.

There are reasons why the small routes are not profitable for TG, and that's why it makes sense to start a completely new airline. And yes, it also is in direct competition to Air Asia, as someone mentioned in another post.

When I read "Thai Smile will have 11 new aircraft, four of which will be 174-seat Airbus A320s, to be received early next year", I understand that it might mean new-to-the-carrier, not necessarily brand-new ex-factory. Or that not-all of the aircraft will be brand-new.

Given the long lead-times for new-order A320s at present, I doubt (but would be pleased to be wrong) that Thai Smile have been able to benefit, from the late-cancellation of some other operator's order.

Since I've seen elsewhere that Thai Airways will lease six A320s from RBS Aviation Capital for delivery in 2012-2013, I don't assume that the lessor hasn't had them out flying elsewhere, for someone else.

The retirement of older-aircraft from the main fleet, to be used on the new start-up LCC, was the strategy Thai used with NokAir, and also Air Asia Thailand used it with the elderly-B737s, which they've now replaced with A320s.

Edited August 20, 201115 yr by Ricardo

Cynical and suspicious.

Thai Airways has a well-established domestic network, albeit faltering and cut-backs have been their worst enemy.

Instead of inventing a "new" airline subsidiary why not take this new found underwriting and put it to better practice - maintaining and retreiving the old and expandeding their dying domestic routes.

Since all national carriers tend to be subsidized by respective governments, why dig yourself into another hole that can't be filled. Their business practices and history should tell you everything you need to know.

Excellent I will be running from Air Asia to use their service.....I am sick of their money grabbing idiotic cr_p, now 100baht to check in at the airport but still have to get your documents checked by the same staff that will charge you the 100baht even when you check in on-line....what total bull, Guess TF is too busy playing F1 and football team owner to give a clap about passenger scum, hope they fall as fast as they climbed..good luck to Thai and whatever stupid name they choose

whats hiding behind the smile?

I was thinking more which smile.

The smile on the face of the Thaiger

Nok Air turned out to be an excellent airline and is more-or-less now out of Thai's control, and Thai's attempts to buy back Nok Air shares have failed so far. I can't imagine what goes through the mind of the powers-that-be at Thai....

Can I ask an obvious question? If you already have a low cost airline, why would you want to start a new one?

Now I am no business expert, but would it not make more sense to give Nok Air a boost, or if that is not succeeding, rebrand it as a new airline, buy some more aircraft for it? Surely low cost airlines are about running them efficiently rather than splashing out on a new airline (financed from god knows where), when you are bored with what you have? It just seems the mindset of setting up a new budget airline does not reflect the way the management are going about it?

Edited August 20, 201115 yr by MaiChai

why not call it "Grinning Tiger"

Sounds like Thai airways are trying to make a silk purse out of a sows ear with this new brand. They'll be going up against a very successful Air Asia and it seems their projected profits in 2013 of bt5 billion is pretty optimistic.

So that saves TG from having to find buyers, for some of their older planes, as they're replaced in the main fleet.

And also spells out which unprofitable domestic-routes, they plan to stop flying-to, under their main brand-name. Note that the list doesn't include Chiang Mai or Phuket, which would be the obvious destinations, for most new LCCs.

Or am I being cynical ?

No, you just can't read. OP clearly states that Thai Smile will receive NEW airplanes. In fact, the reason why the new airline has to wait until about middle of next year before they start operating is that they have to wait for the airplanes.

There are reasons why the small routes are not profitable for TG, and that's why it makes sense to start a completely new airline. And yes, it also is in direct competition to Air Asia, as someone mentioned in another post.

When I read "Thai Smile will have 11 new aircraft, four of which will be 174-seat Airbus A320s, to be received early next year", I understand that it might mean new-to-the-carrier, not necessarily brand-new ex-factory. Or that not-all of the aircraft will be brand-new.

Given the long lead-times for new-order A320s at present, I doubt (but would be pleased to be wrong) that Thai Smile have been able to benefit, from the late-cancellation of some other operator's order.

Since I've seen elsewhere that Thai Airways will lease six A320s from RBS Aviation Capital for delivery in 2012-2013, I don't assume that the lessor hasn't had them out flying elsewhere, for someone else.

The retirement of older-aircraft from the main fleet, to be used on the new start-up LCC, was the strategy Thai used with NokAir, and also Air Asia Thailand used it with the elderly-B737s, which they've now replaced with A320s.

These aircraft were ordered quite some time ago, when the working title for the new airline was stilll "Thai Wings". All that is new is the new name - which I don't like, as the average Thai person can't pronounce it. But that's another story.

The aircraft will be new as I said, and the only reason Thai Smile will have to wait until next summer is that they are waiting for the aircraft. Which they had initially hoped would be delivered this year, but that won't happen.

So, before you jump to conclusions, I suggest you check (or at least ask for) the facts.

whats hiding behind the smile?

Same thought occured to me...

\

a disaster waiting to happen.

duh if the same organization can not run an ordinary airline why would they think they could run a low cost airline without any knowledge of how to

What makes you think they can't run an "ordinary" airline? What makes you think they don't have people who have knowledge of how to run a budget carrier?

You seem to know a lot. How long have you been in the airline industry, and were did you pick up the term "ordinary airline"?

Can I ask an obvious question? If you already have a low cost airline, why would you want to start a new one?

Now I am no business expert, but would it not make more sense to give Nok Air a boost, or if that is not succeeding, rebrand it as a new airline, buy some more aircraft for it? Surely low cost airlines are about running them efficiently rather than splashing out on a new airline (financed from god knows where), when you are bored with what you have? It just seems the mindset of setting up a new budget airline does not reflect the way the management are going about it?

To some extent this whole episode is just childish petulance.

I fly Nok 4 to 6 times a month and they are quite good. Easy website, easy check-in, easy boarding, in-flight service quite attentive, good attitude, good listeners, can-do quick response. Drinks snacks, beer is extra but quite reasonable prices.

In the early days of Nok their CEO took a very tough stance and successfully fought off attempts by Thai and their BOD political appointees to offload: their past use by date cabin crew, and their cabin crew who have have poor performance records.

The Nok man realized, correctly, that Nok needed to be different to Thai and he also realized that he needed totally new staff, he realized that accepting old Thai staff with poor attitude would not work and would kill the image he wanted for Nok.

Checking the behavioral competencies / attitudes became of the the most serious parameters in recruitment for the new staff. He has proven to be correct.

The CEO often flies, as a passenger, on their various routes, building staff moral, talking to passengers (who mostly don't know who he is - the cabin crew know not to make a fuss when he comes on board, just treat him like any other passenger), carefully privately correcting any service factors that he wants to be better - making sure nobody (staff) feels embarrassed.

His cabin crew have no hesitation to talk with him, offer their thoughts about service, etc., and he listens and discusses.

He makes sure he talks with passengers, he listens carefully to their comments, seeking further details, etc. He's a clever guy.

And he makes sure all of his staff have as little contact as possible with Thai.

The Nok CEO was threatened with dismissal several times in the early days but he bravely stood his ground and won. He got very strong support from Khun Korn the Dem Finance Minister who had quite some success at shaking up Thai.

Today the Thai board / political appointees have given up trying to get their sticky fingers into Nok, and play their nepotism games with Nok.

Now they will try again by starting another airline.

Edited August 21, 201115 yr by scorecard

Can I ask an obvious question? If you already have a low cost airline, why would you want to start a new one?

Now I am no business expert, but would it not make more sense to give Nok Air a boost, or if that is not succeeding, rebrand it as a new airline, buy some more aircraft for it? Surely low cost airlines are about running them efficiently rather than splashing out on a new airline (financed from god knows where), when you are bored with what you have? It just seems the mindset of setting up a new budget airline does not reflect the way the management are going about it?

Thai Airways only owns 39% of Nokair, source - wikipedia, so may not regard it as 'theirs' enough, this begs the question why did they set it up that way ?

No, you just can't read.

So, before you jump to conclusions, I suggest you check (or at least ask for) the facts.

Why the aggression, dude ?

I always thought that Nok Air was owned by Thai. What will happen there?

They may have missed the boat as Air Asia have many of these routes tied up already and their marketing is very good, though their website becomes more and more difficult to use every time they think of a new extra to charge for.

It seems to me that it's the way to make Thai Airways profitable again, as a previous poster says, taking all the loss-making domestic routes away from the main carrier.

Air Asia: marketing is one thing. Service, safety, and lucid business practices are another.

I'm still quite fascinated as to the consistent slobering and fawning that takes place for Air Asia, when truly they have a horrid reputation [international and domestic]....

Perhaps, in time, the region will secure a decent carrier.....because, at present, there is none to be found [of the 5-6 airlines that serve the domestic market].

No, you just can't read.

So, before you jump to conclusions, I suggest you check (or at least ask for) the facts.

Why the aggression, dude ?

It's sometimes quite frustrating when people just write things without knowing what they are talking about. Not in the form of sentences, but as facts. <sigh>

Explanation:

OP says Thai Smile gets new aircraft. Instead of asking "Do they mean 'new' when they says 'new or do they mean 'used'?" you concluded that Thai Airways will off-load their oldest aircraft onto Thai Smile. That's some new interpretation of the word "new" based on a negative bias. Why so negative?

Can't we just give Thai Airways the benefit of the doubt?

It's sometimes quite frustrating when people just write things without knowing what they are talking about. Not in the form of sentences, but as facts. <sigh>

Explanation:

OP says Thai Smile gets new aircraft. Instead of asking "Do they mean 'new' when they says 'new or do they mean 'used'?" you concluded that Thai Airways will off-load their oldest aircraft onto Thai Smile. That's some new interpretation of the word "new" based on a negative bias. Why so negative?

Can't we just give Thai Airways the benefit of the doubt?

I interpreted "new" as possibly meaning "new to the carrier", rather than "brand-new from the factory", which the OP didn't say. I would expect any business to put the best 'shine' on things, and to therefore say "brand-new", if that's what they mean. I accept that it might have been lost in-translation.

I actually regard it as a positive thing to say, that they may find a use in-house for some of their "older aircraft", as it avoids having to find new purchasers for them or scrap them, I did not say "oldest" aircraft, as some of those A300-600s & B744s have given good-service for a long time now !

And in fairness they had done this before, with their previous start-up, NokAir.

Regarding negativity on routes to be flown, Thai has been criticised over several years, every time they've tried to withdraw service on presumably-unprofitable or less-important domestic services. They have come under severe political pressure to maintain some of these routes at times, which doesn't help the newish management, trying to turn the company round. One feels for them.

Using a new LCC-subsidiary to maintain service, while cutting flight-crew & cabin-crew costs by hiring new staff (from outside ?), and operating dense-seating (although apparently 1 row less than Air Asia's A320s) is IMO likely to be followed by withdrawl of full-service TG-services on the routes listed. Hence the exclusion of the denser routes, to Phuket/Chiang-Mai/Hat-Yai, from Thai Smile's plans. This is reasonable speculation, rather than negativity, would you agree ?

It's not IMO negative to worry, that in running their main-fleet plus NokAir plus Thai Smile and eventually perhaps the joint-venture with Tiger Airways, TG-management may lose sight of the overall-plot. Merely putting a few aircraft into a new wholly-owned division, with a new management & lower labour-costs, gives the appearance of active-management but doesn't do anything to address possible problems of over-manning or high-overheads in the main business. As you may by now have guessed, I'm a button-counter, amongst other things.

Airline boards have been known to try this before, only to regret it a few years later, despite or sometimes because of the relative-success of the new operation. Scorecard's post on the experience of NokAir highlights this. I quite enjoyed Barbara Cassani's book on the airline "Go", concerning British Airways' foray into no-frills-ops, in Europe too. Thai isn't the first legacy-carrier to have to grapple with modern competition.

I also experienced these problems myself at-first-hand, with what was then the world's largest holiday-airline, when I was brought-in towards the end of their attempts to run low-cost scheduled-flights from the UK. It was a strategic and managerial dogs'-dinner ! The board (led by a new MD) shortly-afterwards decided to focus on their core-product, and walked away from a potentially very-successful operation, leaving the LCC-sector to evolve with EasyJet & RyanAir, because they felt they must first fix their core whole-plane charter business. By the time they tried again, several years later, they were also-rans rather than leaders.

I wouldn't want our already-struggling national-carrier here to face similar dilemmas !

Edited August 21, 201115 yr by Ricardo

Thanks for your in-depth reply. The length of it makes it difficult to reply to the various aspects you mention. Let me try:

Nok Air is a different animal. They are leasing aircraft from TG, and they have also gone independent, making their own decisions. Thai Smile will be 100% owned by TG. And your interpretation was still an unreasonable jump to conclusions.

As you appear to be familiar with the airline industry (at least in the past and related to the UK, I don't know about now and Thailand) you will know that TG has had a new president for a short while (has it been two years already?) and he has turned things around. Forget everything you know about TG's management from before. He is a true professional, and he has also made TG's management decisions independent from the government (I didn't say, from sticky figures in politics, but his wording suggested that).

This also means that non-profitable routes will not be flown for political reasons, as in the past. TG has become a company, as opposed to a political tool.

Your worries are totally negative, as well as pessimistic. Yes, there are examples in the world where the wrong people tried the wrong things, but there are also examples which are success stories.

TG will hire (or already have hired) top management people for the the new airline. Knowing Khun Piyavasti's business sense, I trust that he will hire the right people for the job. Explain to me why you think the opposite is more likely.