Thai Smile needs to focus on feeder role at Bangkok Suvarnabhumi as Thai Airways restructures

Thai Airways regional subsidiary Thai Smile could be approaching a critical juncture as its parent pursues a major restructuring. Thai Smile could be used to take over Thai's unprofitable regional routes but the group also has been using the subsidiary to expand in point to point markets as competition with LCCs intensifies.

Thai Smile has made several strategic U-turns since its 2011 conception and now has dual roles, serving as a feeder for Thai Airways at Bangkok's main international gateway Suvarnabhumi while competing against LCCs on point to point domestic routes from Bangkok's original airport Don Mueang. The roles are somewhat contradictory and not easy to balance. Ultimately the group may need to adjust its multi-brand strategy and refocus Thai Smile, which has generally lacked the cost structure to compete effectively at the bottom end of the market.

Thai Smile's fleet will grow to 20 A320s by the end of 2015. The group has no additional narrowbody commitments for 2016 or beyond. Further fleet growth is possible, particularly if Thai Smile is used to take over more Thai Airways routes, but is hardly guaranteed and could hinge on further changes to its business model.