Transport Ministry Rejects Thai Airways’ Budget Airline Plan

[webfact]

Transport Ministry rejects Thai Airways’ budget airline plan
By English News



BANGKOK, April 26 – The Transport Ministry has turned down a proposal by Thai Airways International (THAI), Thailand’s flag carrier, to set up a subsidiary to operate a budget airline.

Transport Deputy Minister Prin Suvanadat said Thursday that the ad hoc committee on the proposed Thai Airways’ sister company demanded a more concrete plan for the operation of THAI Smile Airway.

THAI will have to thoroughly rework its proposal and assess and compare the pros and cons of a subsidiary before reintroducing the proposal and its expected impact to the committee next week.

Gen Prin said the committee was concerned that THAI’s business will be eroded in the long run since THAI Smile will take over domestic and regional flights from the mother company.

European airlines including Lufthansa, British Airways and Air France set up similar subsidiaries which eventually carried away their mother companies’ revenues, he said.

According to the proposal, THAI’s service on nine routes will be substituted by THAI Smile next year. Among them are Hong Kong, Luang Prabang and Siem Reap.

THAI Smile is expected to operate 372 flights daily by the end of 2015.

Gen Prin said THAI must clearly identify new routes to substitute losing revenue from the routes given to its sister company.

THAI, listed in the Thai stock exchange, plans to set up a wholly-owned subsidiary with registered capital of Bt1.8 billion (US$62 million) in the belief that operation costs in the new business unit will be lower, thus generating higher revenue.

It plans to have THAI Smile fly on new routes such as Luang Prabang, Chiang Mai, Hong Kong and Siem Reap next year, and to Samui, Chiang Rai, Phnom Penh, Macao, Shenzhen and Hangzhou in 2015. Its fleet will expand accordingly. (MCOT online news)


-- TNA 2013-04-26

[Thai at Heart]

Isn't it the Finanace Ministry that owns the shares in TG?

What has the the transport ministry to do with it?

[GentlemanJim]

This is what happens when you let Government in to making business decisions. Does Gen Prin understand that it is better Thai Smile take the low cost business as a subsidiary of Thai Airways than to lose it all to Nokair or Air Asia.

[JoePai]

I have flown several times on Thai Smile and it is not low cost - it is the same fare as the old(?) Thai Int. fares. The only advantage is they use new planes and not the old rubbish Thai normally uses.

Edited April 26, 2013 by JoePai

[GrantSmith]

Don't think Thai will be too concerned about losing the LCC market to Nok Air given the fact that they already own 49% of it.

If it's a 100% wholly owned subsidary, how (why) is the Thai Government concerned that revenue is going to be displaced? The MOF has the majority of the shares (51%)

Unless of course the good General is concerned that he'll have to schlep it on Thai Smile with his wife during their weekend shopping trips to HKG, instead of a shiny brand new A380 business class seat

[Scorpio1949]

Funny how Thai tries to do things that are 100% useless where it would be better to get more shares in NOK or is that impossible ??? I thought that in Thailand NOTHING is impossible.................

[xkmasada]

So TG tried and failed with Nok Air, and now they want to try again with Thai Smile? Only a fool would be let them!

[kimamey]

Isn't it the Finanace Ministry that owns the shares in TG?

What has the the transport ministry to do with it?

I assume this is sarcasm?

[3SoiDogNight]

What is the point of Thai Smile?

I always get great deals on Thai Airways anyway.

[canopus1969]

From looking at the fares Thai Smile is not a LCC !

[ozyjon]

I'm sick and tired of finding a really great fare only to do the sums and find out the fare is higher than a regular fare, add up drinks, chose your seat, meals, entertainment, a blanket, earphones etc, etc, i hope all these low carriers play fair and not try to rip people off by displaying low fares then adding on extras, maybe we need more competition to rid the sky's of dubious operators....

[Locationthailand]

Why not spend the money on a take over of Nok. Far cheaper and then takes out the competition. But that would be logical and there are fewer ways to skim for the purchase contracts, if it only involves share transfers.

[surangw]

I'm sick and tired of finding a really great fare only to do the sums and find out the fare is higher than a regular fare, add up drinks, chose your seat, meals, entertainment, a blanket, earphones etc, etc, i hope all these low carriers play fair and not try to rip people off by displaying low fares then adding on extras, maybe we need more competition to rid the sky's of dubious operators....

same prices, just a different way to scam the customers

[scorecard]

Don't worry folks, many of the seats on the Thai BOD are political appointments / gifts for past favors.

It won't take long before an overseas behind the scenes hand reminds them how to vote.