Thai Airways International Drops Plan For Low-Cost Airline Next Year Amid Losses

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National Carrier

THAI drops plan for low-cost airline next year amid losses

BAMRUNG AMNATCHAROENRIT

THE NATION

BANGKOK: -- The attempt to launch a low-cost airline next year by Thai Airways International (THAI) will most likely be dropped due to its ongoing financial losses.

Ampon Kittiampon, the board's chairman, confirmed on Thursday that the company's board had decided that launching a low-cost carrier would not be included in its "strategic business plan" this year.

He added that he was not pleased with THAI's financial results for the second quarter because it had posted a loss. Though the airline's cabin factor was good during the period, he said the general business performance had not gone this way.

From now, he said, THAI will spend more time improving its financial performance so it returns to profitability after suffering losses of Bt10.2 billion last year. It will also focus on its sister airline, THAI Smile, so it can spread its wings wider, especially regionally. THAI Smile was launched early last month.

He said the firm would analyse the performance of THAI Smile after it has been flying three to six months. The newly launched airline claims to have a cabin factor of more than 80 per cent in the Bangkok-Macau route.

This low-cost airline was the brainchild of Piyasvasti Amranand, the former THAI president who was ousted in May.

A source at THAI, who declined to be named, said the board may also consider reshuffling some key positions held by people with strong ties to Piyasvasti at the next meeting on Friday, saying the second-quarter financial losses are down to their performance.

They include Pandit Chanapai, executive vice president, commercial, as well as Teerapol Chotichanapibal, executive vice president for product and customer services, and Sunatee Isvarphornchai, who is a vice president for corporate communications and public relations.

However, some board members disagree with the move, saying the new president should acknowledge it. The board will also consider downsizing the firm's public relations department.

THAI's acting president and executive vice president Chokchai Panyayong said it was essential for the national carrier to launch a low-cost airline in order to get a share of the market, which has been growing continuously and will blossom once the Asean Economic Community is implemented in 2015. Also, the sister airline would strengthen the airline's role in the aviation industry.

Under the plan, THAI has assigned Nok Air, another low-cost airline that the carrier holds a 49-per-cent stake in, to carry out research on its business opportunity. If the outlook is good, THAI will move ahead by forming a joint venture with Nok Air and buying a larger stake.

-- The Nation 2012-08-13

[Bluespunk]

What is "cabin factor"?

[hellodolly]

Maybe they should start a low cost airline to use some of the exsisting planes on. They are far from a quality air line.

[Ricardo]

So 'Thai Smile' is now a "sister airline", not the low-cost subsidiary which it was intended to be, and they will wait 3-6 months after its launch (last month) before looking at how well it is doing ?

And the acting-president "said it was essential for the national carrier to launch a low cost airline", but "the company's board had decided that launching a low-cost carrier would not be included in its "strategic business plan" this year".

But they might feel like forming a low-cost subsidiary with Nok-Air, and buying a larger stake in them, if the wind is in the right direction, at the appropriate juncture, after due study (by someone else), and in the fullness of time.

Well I'm glad that's all clear !

[Morgo]

What is "cabin factor"?

Something to do with the mile high club?

[Payboy]

What is "cabin factor"?

Fancy name for filled seating capacity.

Although in Thais case they should also include the freebie seats factor.

Edited August 13, 2012 by Payboy

[noitom]

What is "cabin factor"?

The "cabin factor" is the multiplicand of two derivatives of the square root of Thai imagination divided by the polynomial fraction of the answer to the cube root of Thai skills to the 8th power. The answer to all of that is 0.

[canopus1969]

What is "cabin factor"?

Usually expressed as a percentage , it is the average number of passengers per flight

[fredob43]

Bum's on seat's 'cabin factor' or in Thai's case lack of, I stopped using Thai Air over 10 year's ago, due to a problem two year's ago I had to use them one way from BKK to London. The plane was at best old, food I didn't/couldn't eat, seat's tatty with no head's up TV monitor, service what service all in all a very pore show, and they wonder why they are loosing monies. Thank Buddha for EVA AIR and their like's.

Edited August 13, 2012 by fredob43

[PaullyW]

Wait, I thought they were doing swimmingly... Tourism numbers were through the roof, I read. Man, so confusing.

[hellodolly]

What is "cabin factor"?

The "cabin factor" is the multiplicand of two derivatives of the square root of Thai imagination divided by the polynomial fraction of the answer to the cube root of Thai skills to the 8th power. The answer to all of that is 0.

I really hate to disagree with you but you are wrong it is-.09.

You made mistake in the square root of Thai imagination.

[kartman]

Is this the third time i've seen this reported?,when the chairmans out playing golf and needs a cover does his secretary keep sending out the same press release?

[bangon04]

"From now, he said, THAI will spend more time improving its financial performance so it returns to profitability after suffering losses of Bt10.2 billion last year. It will also focus on its sister airline, THAI Smile, so it can spread its wings wider, especially regionally. THAI Smile was launched early last month."

Yes all very confusing - Thai Smile is not lo cost, so what is the reason for its existence? Why does Thai need a sister airline launch if it is already making a loss.? To share the blame?

and improving its financial performance usually means increase the fares again to make them even less competitive, and reduce investment in cabin equipment from shabby to miserable...

[bangon04]

Pity it is too late to cancel the A380s - they have been advertising them for months already..

[3SoiDogNight]

I really do not understand the purpose of Thai Smile Airline.

Not sure why Thai Airways wants another low-cost carrier. Nok Air is just fine and I've found great deals on Thai Airways anyway so to add a low-cost carrier seems redundant.

[Pseudolus]

I read this as the following.

The execs said to everyone from off route airports / Airplane sales men, food suppliers, travel agents... the who shebang that they are launching the low cost carrier. They then duly collect all the bungs. Then the cancel the project.

Good planning boys.

[Ricardo]

"From now, he said, THAI will spend more time improving its financial performance so it returns to profitability after suffering losses of Bt10.2 billion last year. It will also focus on its sister airline, THAI Smile, so it can spread its wings wider, especially regionally. THAI Smile was launched early last month."

Yes all very confusing - Thai Smile is not lo cost, so what is the reason for its existence? Why does Thai need a sister airline launch if it is already making a loss.? To share the blame?

and improving its financial performance usually means increase the fares again to make them even less competitive, and reduce investment in cabin equipment from shabby to miserable...

Q. When is a low-cost airline not a low-cost airline ?

A. When it's a lower-cost sister airline, set up under previous management to fly low-cost regional routes, and later re-jigged to fly mainly domestic-routes and substitute for more-expensive full-service flights by the Big Sister airline !

[mancub]

Just the usual Thai business piss-up/brewery interface ! Change the rules/name ,find a scapegoat ,fool the stupid and pretend there's no loss of face ! If they had any honour ,they'd fall on heir swords like our Japanese cousins ! ( Mind you, they'd probably miss !)