Thai Airways International consolidates its low-cost activity at Don Mueang

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Written by Linda Hohnholz

BANGKOK, Thailand (eTN) – For a week, Thai Smile Air, a subsidiary of Thai Airways, has started to relocate some of its flights from Suvarnabhumi to Don Mueang airport in Bangkok.

BANGKOK, Thailand (eTN) – For a week, Thai Smile Air, a subsidiary of Thai Airways, has started to relocate some of its flights from Suvarnabhumi to Don Mueang airport in Bangkok. All of the airlineโ€™s flights will be moved at Don Mueang for the winter timetable while a new cooperation agreement has been signed with Thaiโ€™s other low-affiliate Nok Air.

Thai Airways International has seen its market share eroded over the last decade by the rapid rise of low-cost airlines in Thailand. Although the main competitor today to Thai Airways is the AirAsia Group, they are another dozens of budget airlines flying today to Thailand. The most important are Jetstar, Tiger Air, Cebu Pacific, the Lion Air Group, as well as a few Korean carriers and a mainland Chinese airline, Spring Air. In Bangkok, low-cost airlines had in the first half of 2014 a market share of 33.9%, the equivalent of 10.92 million passengers over a total of 32.18 million passengers. While total passenger traffic declined by 4.3% between January and June 2014, low-cost airlines recorded a growth of 19.3% during the same period of time.

Thai Airways has long been unable to tackle the low-cost issue. It created Nok Air 10 years ago, a domestic low-cost affiliate in which Thailandโ€™s national carrier today holds 39.2% of all Nok Air shares following the low-cost carrierโ€™s successful IPO. But for a while now, Thai Airways has had little leverage power over its affiliate which operated very independently. In parallel, Thai tried to create a regional ultra-low-cost airline. Associated in a joint venture with Tiger Airways, the deal never materialized and was quietly abandoned under political and union pressure. Then, in 2012, Thai Airways created Thai Smile, an airline that is a hybrid between a low-cost and full-service carrier. Thai management struggled to position the airline, changing strategies many times. Deemed as premium low-cost airline, Thai Smile then became a feeder for Thai Airways International.

Now, Thai Airways International has suddenly seen the synergies of a large low-cost group based in the heart of the budget airlinesโ€™ main hub, Don Mueang Airport. On August 8, Thai Smile started to relocate some of its aircraft at Don Mueang Airport, flying to 3 domestic destinations (Chiang Mai, Khon Kaen, and Phuket). By October, the airline will transfer its entire network to Don Mueang. The regional network will be slightly adjusted: while Macao, Mandalay, Chongqing, Changsha, Colombo, Phnom Penh, and Luang Prabang will continue to be served by Thai Smile, Thai Airways will take back routes to Hyderabad and New Delhi due to a high number of transfer passengers. Thai Smile will also add Hong Kong and Vientiane over the winter. Coordination will become effective with Nok Air to avoid redundant routes.

Nok Air will likely continue to concentrate on serving domestic routes and a limited regional network in the Mekong area. It currently only serves Yangon in Myanmar and envisions flights to Vietnam, Cambodia, and Laos. More concrete is the launch of long-haul flights with its new affiliate NokSCOOT, a joint venture with Singapore-based SCOOT. The airline will start serving Japan from September 1. Flights to Korea and Northern China will rapidly follow. All airlines will likely offer interlining and transfer services beyond Bangkok.

All together, the new consolidated Bangkok low-cost base of Thai Airways International will then comprise 23 destinations in Thailand and a dozen international destinations. This is the first real competition to the powerful AirAsia Group, which continues to dominate the Bangkok LCC market with over 40 destinations.

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Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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