#Thai #Airways takes low cost #airline plunge with #Smile

The low cost airline market in Thailand is set to become a little more crowded after Thai Airways decided to christen its new low cost carrier unit as Thai Smile. The move by Thai Airways comes after the airline was losing market share to growing low-cost competition in the country which led to the national flag carrier posting a loss in the second quarter of 2011, its first quarterly loss in two years.

Low cost airlines have been setting a scorching pace in the domestic market, posting an average annual growth of 32% during 2003-10. During the same period, Thai Airways posted an average annual decline of 2.3%. To counter this worrying trend, the company has already partnered with Singaporean LCC Tiger Airways. However, the venture is facing a wall of red tape, with the government approval unlikely.

In this scenario, the airline has decided to take the low cost plunge on its own with Smile. The airline had earlier thought of naming the LCC as Thai Wings, but settled on Smile in accordance with the staff’s choice. Smile will commence operation in mid- 2012, with a fleet of 11 new aircraft which will include four 174-seater A320s. The airline is expected to turn profitable from 2013.

The airline will be based at Suvarnabhumi Airport and will initially provide services to provinces such as Udon Thani, Chiang Rai, Ubon Ratchathani and Surat Thani. The LCC’s international prospects will be looked at in 2013, once it becomes profitable.

Will Thai Airways’ bet help it turnaround its decline? To know more about the prospects of low cost airlines in Asia visit Low Cost Airlines Congress 2011.