The airline’s top executives have admitted that the light-premium model with a flexible business class arrangement failed to gain customer acceptance.
The THAI board will consider turning the operation into a separate company fully owned by the national airline but with separate accounts and management structures.
For passengers the most visible change will be the introduction of fixed business class seating and full on-board service similar to Silk Air. This should happen over the next two months when the new airline’s seventh A320 is delivered.
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 Thai Smile to market to Star Alliance passengers, who need to connect with domestic services to complete their journey.
In terms of network, the airline will fly more services to Phuket and Krabi in southern Thailand.
It wants to make Phuket a hub, starting a service from the island to Singapore and another to Chiang Mai.
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, with plans to add more. In the long run Thai Smile will take over all TG’s domestic routes with the possible exceptions of Bangkok-Phuket and Bangkok-Chiang Mai.
Thai Smile’s introduction of a direct Chiang 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.