BANGKOK, 25 September 2013 The Cabinet has endorsed Thai Airways International Plc. to establish the Thai Smile airline to compete in the low-cost airline segment, believing that the new company will be able to generate almost 2 billion baht of annual profit by the year 2017.
According to Chalitrat Chantharubeksa, deputy spokesperson to the Office of the Prime Minister, the endorsement is for Thai Airways to establish the wholly-owned company with registered capital of 1.8 billion baht. Thai Airways will hold 100% of the 180 million shares in Thai Smile, which is slated to take over operations in 14 of its parent company’s regional routes.
According to Mr. Chalitrat, Prime Minister Yingluck Shinawatra has told the Ministry of Transport and Thai Airways executives to oversee the corporate culture aspect and prevent conflicts between the parent and daughter companies. It has also been emphasized that a clear market must be designated for the new airline, as Thai Airways already is a major shareholder of Nok Air, which operates low-cost domestic flights.
Mr. Chalitrat indicated that Thai Airways will now put emphasis on operating long-haul flights with ‘premium full service’ using wide-body aircraft, and utilizing Suvarnabhumi Airport as base. Thai Smile will focus on domestic and regional flights that are no longer than 4 hours in duration using narrow-body aircraft based at Suvarnabhumi airport. It will also operate with an aim to become a leading carrier within the ASEAN Economic Community and to have Nok Air, which is based at Don Mueang Airport, become a low-cost regional carrier that operates narrow-body jetliners and smaller aircraft in a point-to-point fashion.
Mr. Chalitrat said Thai Smile is expected to carry 5.3 million passengers and generate 8% net profit per year by 2015.