It appears that Thai Smile will be fully absorbed by Thai Airways with the brand completely discontinued. And this integration will bring positive impacts to both the airline and passengers.
Thai Smile Brand To Be Discontinued, Fully Merged With Thai Airways
On May 17, 2023, THAI reported that their creditor’s committee gave the merger the green light to absorb its low-cost subsidiary Thai Smile into its mainline fleet.
Just a little brief detail about Thai Smile, the airline is a wholly owned low-cost subsidiary of Thai Airways founded back in 2011. The airline has 20 Airbus A320s currently in its fleet, mainly serving all of Thailand’s domestic routes and select Asian routes.
Back in late February, debt-driven THAI Airways revealed plans to merge Thai Smile Airways to reduce losses as part of its overall restructuring plan. This came after the Thai flag carrier filed for bankruptcy protection in 2020 and aims to complete restructuring in 2024 through a debt-for-equity swap.
It was not until yesterday the creditors approve the merging and now pending approvals from the Civil Aviation Authority of Thailand and the transport minister.
Benefits of Thai Smile – Thai Airways Merger
There are a few positive impacts the merger will bring:
- Thai Smiles currently operates with its own Air Operator Certificate (AOC). So the merger will let THAI manage more easily.
- It will also bring better coordination of short-haul and long-haul flights, capacity, aircraft utilizations and many more cost-related benefits.
- Since Thai Smile offers restricted benefits for all frequent flyer members, the merger will improve the member’s recognition.
- Thai Smile has struggled to return profits to THAI, therefore, it is better for the airline to be one in order to effectively improve fleet planning management and regain competition with other low-cost carriers.
THAI CEO Chai Eamsiri said, all of the airlines’ 20 A320s will be transferred to THAI’s main fleet and more than 800 employees will be transferred without an impact.
THAI Becomes The Latest Asian Carrier To Retire Low-Cost Subsidiary
Thai Airways is not the first airline to merge its low-cost subsidiary into its mainline fleet. Back in 2021, Singapore Airlines absorbed its low-cost airline Silk Air while in October 2020, Hong Kong’s Cathay Dragon (formerly Dragon Air) closed down and merged with Cathay Pacific.
The reason behind every low-cost subsidiary failing to generate profit is due to fierce competition with other low or ultra-low-cost carriers like Air Asia, Scoot, Jetstar and many more. These airlines sometimes offer ridiculously low fares that cannot compete.
Subsidiary airlines such as Thai Smile, Silk Air and Cathay Dragon is neither low-cost nor full-service carrier, therefore, they are in a tricky situation. It is better for the parent company to take over and create competition.
Summary
THAI has received a green light to merge its low-cost subsidiary – Thai Smile with the merger expected to complete by the end of this year. This will positively benefit the debt-stricken airline to save costs and regain competitiveness.
