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Thai Smile Turns To Frown; Abandon LCC Concept  
User currently offlineLAXintl From United States of America, joined May 2000, 25377 posts, RR: 49
Posted (1 year 5 months 2 weeks 4 days 7 hours ago) and read 8173 times:

Well that did not take long.

Launched only last July, the Thai Airways subsidiary Thai Smile has decided to ditch its LCC concept which it apparently found difficult to implement in an already crowded market, and instead shift to emulate the likes of Dragonair and Silk Air with an upgraded product including fixed business class.

The change over will occur this month with the delivery of the airlines 7th A320. The new product will be available to Delhi, Kuala Lumpur, Singapore and Siem Reap from Chiang Mai, Phuket and Bangkok by the end of the year as more aircraft are converted.

Story:
Thai Smile will get out of the low cost model
http://www.traveldailynews.asia/news...icle/51900/thai-smile-will-get-out

Lets see if this makeover does any better.
I have doubts as unlike the Dragonair and Silk home markets, Thailand especially in secondary cities like Chiang Mai, Phuket will drive very small fraction of the front cabin demand. At the end of the day, Thai Smile will still be having to compete and chase after the LCC traffic to fill its planes.

=

[Edited 2013-04-03 14:41:45]


From the desert to the sea, to all of Southern California
15 replies: All unread, jump to last
 
User currently offlineNZ107 From New Zealand, joined Jul 2005, 6430 posts, RR: 38
Reply 1, posted (1 year 5 months 2 weeks 4 days 7 hours ago) and read 8033 times:

Quoting LAXintl (Thread starter):
shift to emulate the likes of Dragonair and Silk Air with an upgraded product including fixed business class.

I still don't understand this part. The fact that KA operates to many destinations alone without CX touching them and also that SQ may operate once daily flights to some places where MI operates a few daily services means that they're not cannibalising their own market. Thai is different as it operates these routes with the mainline services already. It'd be a different story if TG didn't operate any domestic flights and started Thai Smile to do the domestic flights for them. Or something along that line anyway.

The impression TG gave us about Thai Smile was that it wasn't a 'true' LCC nor a full service carrier. I think TG could cater for both needs of TG and Thai Smile within their fleet already - just change the fare structure a little.

I believe this would have ultimately been the fate of RedQ too, if QF had their way with MH.



It's all about the destination AND the journey.
User currently offlinemercure1 From French Polynesia, joined Jul 2008, 1476 posts, RR: 2
Reply 2, posted (1 year 5 months 2 weeks 4 days 2 hours ago) and read 7435 times:

Why did Thai Airways create Thai Smile to begin with?

Were they not losing enough money without directly going to battle against low cost carrier segment? Seems TG had enough presence in domestic Thai market and no need create added brand to almost compete against itself.


User currently offlineHB-IWC From Indonesia, joined Sep 2000, 4504 posts, RR: 71
Reply 3, posted (1 year 5 months 2 weeks 4 days 2 hours ago) and read 7378 times:

They may as well rebrand the entire thing as Thai Airways, use the A320s to replace the 5 remaining B734s to those destinations where TG wide body service is not warranted and get out of those destinations which are already featuring multiple daily TG widebody service.

User currently offlinevfw614 From Germany, joined Dec 2001, 4003 posts, RR: 5
Reply 4, posted (1 year 5 months 2 weeks 3 days 21 hours ago) and read 6915 times:

Well, Thai Smile was feature in the last edition of Airliner World. Statistically, a feature in this magazine is the kiss of death for new carriers, so they are happy to only be forced to re-shape their concept...  

User currently offlineLAXintl From United States of America, joined May 2000, 25377 posts, RR: 49
Reply 5, posted (1 year 5 months 2 weeks 3 days 13 hours ago) and read 6309 times:

As I recall the announced plan in 2011 was for TG to partner with Tiger Airways and set up a Thailand subsidiary.

But something went wrong with that announced plan, and then Thai went on its own to create Thai Smile branding.


But it seems several things for Thai Smiles did not fit right from the start. For instance instead of planned separate operation and staff, they still rely on TG for many functions including using the TG AOC and TG services like airport handling. This brings in the higher TG mainline cost model.

Also as LCC they chose to be located at Suvarnabhumi, a higher cost facility, I'm not sure the local Bangkok customer will neccisarily look to go out there opposed to closer to town Don Mueang Airport where all the other LCCs have set up shop. Yes they can generate connections from TG, but at the loss of local traffic likely.

And then is the network - instead of all unique routes, they have many that overlap mainline TG from BKK, in essence competing against yourself.

Seems like a confused concept and execution.



From the desert to the sea, to all of Southern California
User currently offlinedebonair From Germany, joined Jan 2004, 2429 posts, RR: 4
Reply 6, posted (1 year 5 months 2 weeks 3 days 10 hours ago) and read 5991 times:

Quoting LAXintl (Thread starter):
Thai Smile has decided to ditch its LCC concept

That's a big mistake - THAI SMILE never operated as LCC. Within the THAI-Group, NOK AIR was designed as a pure LCC - THAI SMILE was a hybrid low-fare airline (with full frills like meals, connecting flights, premium seating etc.!) but on a lower/cheaper operating basis.


User currently offlineEK413 From Australia, joined Nov 2003, 4919 posts, RR: 4
Reply 7, posted (1 year 5 months 2 weeks 3 days 10 hours ago) and read 5921 times:

Just need to be brought up to speed here, TG decided to operate not 1 but 2 low-cost carriers...? From my understanding isn't NOK AIR owned & operated on behalf of TG...?

EK413



Good evening, ladies and gentlemen. We are tonight’s entertainment!
User currently offlineLAXintl From United States of America, joined May 2000, 25377 posts, RR: 49
Reply 8, posted (1 year 5 months 2 weeks 3 days 8 hours ago) and read 4640 times:

Quoting debonair (Reply 6):
That's a big mistake - THAI SMILE never operated as LCC. Within the THAI-Group, NOK AIR was designed as a pure LCC - THAI SMILE was a hybrid low-fare airline (with full frills like meals, connecting flights, premium seating etc.!) but on a lower/cheaper operating basis.

According to Thai Airways themselves they basically call Thai Smile a rather generic LCC operation.

Quoted from a press release:

"THAI Smile brand character is Trendy-Friendly-Worthy, which is reflective of the life-style of new generation smart travelers who place importance on having choices and value for money.

In their annual report they say following:

The commercial aviation industry is seeing growing competition resulting from the aggressive penetration of low cost carrier, newcomers, and more airlines joining network alliances, leading to greater competition on routes served by THAI.
THAI has been closely monitoring the performance of peers including prevailing demand conditions. The outcome of a detailed market analysis reflects a story of highly competitive environment with weakened standing by network carriers.
The launch of THAI Smile is the approach taken to enhance the companies regional competitiveness by operating on a different cost platform.
THAI Smile offering a light service encompassing important market segment will strengthen THAI's overall position as the leading flag carrier.



Even their company mokier is:

"Fly Smart with Thai Smile"

I guess one must be dumb to chose TG mainline.


..Sure sounds like a form of LCC to me...

[Edited 2013-04-04 13:37:50]


From the desert to the sea, to all of Southern California
User currently offlinejetlanta From United States of America, joined Jul 2001, 3297 posts, RR: 35
Reply 9, posted (1 year 5 months 2 weeks 3 days 8 hours ago) and read 4553 times:

Quoting vfw614 (Reply 4):
Well, Thai Smile was feature in the last edition of Airliner World. Statistically, a feature in this magazine is the kiss of death for new carriers, so they are happy to only be forced to re-shape their concept...  

I was thinking the same thing! I wish someone would do an a.net post that chronicles the history of carriers failing within weeks of being featured in Airliner World! Would be great fun.


User currently offlineLAXintl From United States of America, joined May 2000, 25377 posts, RR: 49
Reply 10, posted (1 year 5 months 2 weeks 3 days 8 hours ago) and read 4393 times:

Regarding Nok Air, Thai only has a minority share holding. (recently raised to 49%)

Seems the company was formed almost 10-years ago by mix of banks, individual investors, and investment funds with TG having then a ~30% participation.

As such it seems Nok Air openly competed again TG and managed to create headaches.

I know earlier this year there was talk of Nok doing another share offering to garner more money to grow their fleet, with 737MAX order being contemplated. Not sure where this stands.



From the desert to the sea, to all of Southern California
User currently offlinemercure1 From French Polynesia, joined Jul 2008, 1476 posts, RR: 2
Reply 11, posted (1 year 5 months 2 weeks 2 days 10 hours ago) and read 3519 times:

I think the events of Thai Smile are indicative of the bigger problems at Thai Airways and the poor management and political interference at state airline.

I dont know what remaining TG market share is these days, but it has continued to shrink as competition heats up in Asia, especially from large cadre of LCCs.

Creating Thai Smile appears as a half step attempt, and now had to change its strategy in less then single year.

Maybe should have gone with original plan and help set up Tiger Airways subsidiary in Thailand. At least Tiger has better cost model and experienced management in such competitive field.


User currently offlineairdfw From United States of America, joined Aug 2012, 193 posts, RR: 0
Reply 12, posted (1 year 5 months 2 weeks 2 days 8 hours ago) and read 3349 times:

Quoting jetlanta (Reply 9):
Quoting vfw614 (Reply 4):
Well, Thai Smile was feature in the last edition of Airliner World. Statistically, a feature in this magazine is the kiss of death for new carriers, so they are happy to only be forced to re-shape their concept...  

I was thinking the same thing! I wish someone would do an a.net post that chronicles the history of carriers failing within weeks of being featured in Airliner World! Would be great fun.

Oh Oh, I went over to their website and the current issue is featuring AA.


User currently offlineLawair From United States of America, joined Jan 2009, 201 posts, RR: 0
Reply 13, posted (1 year 5 months 2 weeks 2 days 5 hours ago) and read 3130 times:

While TG has been making modifications to Thai Smile on a seemingly continuous basis, the central purposes of Thai Smile have not changed since its inception.

Company materials from a while back all have Thai Smile serving as a regional carrier, TG's own adaptation of Dragonair and Silk Air. These purposes have remained constant. Thai Smile was never intended to be a no frills/discount carrier. They've called it "premium light," and the airline was intended to provide connectivity to TG's main premium routes, while also developing secondary markets in Thailand that could not justify full TG service. To this day Thai Smile is still intended to serve this purpose, as is evidenced by services to Myanmar, Macau, and smaller cities in India, in addition to regional international routes from Phuket.

http://thai.listedcompany.com/misc/p...esentations/CompanyVisit_Q1_11.pdf

http://thai.listedcompany.com/misc/p...125_THAI_Presentation3Q2011-EN.pdf

Thai Smile is not related to the failed Thai Tiger venture or Nok Air. Thai Tiger was intended to serve as a no-frills low fare carrier that operated routes beyond the domestic services that Nok Air operated. Thai Tiger never materialized because the Thai government was nervous about the amount of control a foreign government (Singapore) would have on the new venture. At the time TG had been intending to have four total carriers:

Full TG - premium services operating regionally and intercontinentally
Thai Smile - light premium operating regionally and domestically
Thai Tiger - no frills operating regionally and domestically
Nok Air - no frills operating domestically

If Thai Tiger worked out, Thai Smile would still have been created, because TG saw it serving a very particular market role, one that you could argue did not exist. Hence, the overlapping of roles both TG and Thai Smile play. TG did not intend to have Thai Smile compete directly with Thai AirAsia with respect to service levels; Thai Smile was really meant to give TG a footprint in the markets Thai AirAsia served and that TG could not serve with their existing equipment. Thai Smile, with a lower cost base, was supposed to be able to give TG access to these markets, while still giving some semblance of a brand relationship to the parent carrier. Macau is an example of a market in which TG had wanted to compete with Thai AirAsia, but could not do economically with their existing widebody aircraft. As soon as Thai Smile was created, Macau was high on its list of first destinations.

[Edited 2013-04-05 17:04:18]

User currently offlinemercure1 From French Polynesia, joined Jul 2008, 1476 posts, RR: 2
Reply 14, posted (1 year 5 months 1 week 6 days 12 hours ago) and read 2410 times:

Quoting Lawair (Reply 13):
Full TG - premium services operating regionally and intercontinentally
Thai Smile - light premium operating regionally and domestically
Thai Tiger - no frills operating regionally and domestically
Nok Air - no frills operating domestically

Sound like mess. I think its been well proven in industry that its very challenging for single enterprise to have such much divergent and competing product under single umbrella.

TG Group is hardly model of efficiency to pull such off well being burdened by government.

I think best options is simply retain mainline TG at BKK and the Nok at DMK base.


User currently offlineLAXintl From United States of America, joined May 2000, 25377 posts, RR: 49
Reply 15, posted (1 year 5 months 1 week 5 days 11 hours ago) and read 2029 times:

I believe TG will be under ever growing pressure in years to come.

Each of its units will face stiffer competition.

I really wish the government would look to privatize the carrier and let it be managed without pressures of politics or need to uphold national interest.



From the desert to the sea, to all of Southern California
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