Thai Airways is quitting six South East Asian routes and transferring them across to its low-cost subsidiary, Thai Smile. Thai Airways is exiting its routes between Vientiane, Luang Prabang, Phnom Penh, Hanoi, Ho Chi Minh, Yangon, and Bangkok. It represents a big downgrade in services to these cities by Thai Airways but is arguably a necessary step as the Bangkok based airline battles to return to profitability.
The news broke yesterday in Live And Let’s Fly. The report quoted Sumeth Damrongchaitham, president of Thai Airways, as saying there was insufficient demand on these routes out of Bangkok to warrant Thai to continue operating its full-service offering.
Thai Smile already operates on several of these routes
On many of these routes, Thai Airways subsidiary Thai Smile is already operating. On the Bangkok – Yangon run, Thai Airways operates an evening A330 service while Thai Smile operates a narrow body morning service. Presumably, Thai Smile will take over the evening service.
Thai Airways only operates is own aircraft on the Bangkok – Luang Probang route twice a week. While the Thai Airways website throws up several daily flights between the two cities, all but the above two flights are already operated by either Thai Smile or Bangkok Airways on behalf of Thai Airways.
Currently, Thai Airways operates a daily evening service between Bangkok and Phnom Penh using A330 aircraft. This looks set to go. Thai Smile already operates the majority of Thai Airways’ timetabled flights on this route.
It’s a similar situation on the Bangkok – Vientiane route where Thai Airways has a daily widebody service and Thai Smile operates the remainder of the flights.
Thai Airways is also exiting Ho Chi Minh and Hanoi
Exiting the Bangkok – Hanoi route is a more interesting move. Thai Airways operates a couple of widebody return services on this route each day whilst Thai Smile has kept off it. So this route looks to be a complete handover. Passengers will be swapping Thai Airways’ full-service premium cabins for a low-cost, all-economy cabin.
It’s a similar situation for Thai Airways’ services between Bangkok and Ho Chi Minh. Thai Airways is dropping its twice-daily services and sending in Thai Smile. It is interesting that Thai Airways cannot generate enough premium business out of the two biggest cities in fast-growing Vietnam to profitably sustain these flights.
While both Thailand and Vietnam can be categorized as developing countries rather than developed countries, complete with all the differences in per capita incomes that this suggests, these are seriously big cities with significant numbers of affluent and super affluent residents. Yet Thai Airways can’t get enough paying bums on its seats in its premium cabins on the two flights a day it offers into both Hanoi and Ho Chi Minh.
There has been a lot of attention paid to both the aviation and economic boom in Vietnam in the last decade. Is Thai Airways’ withdrawal from these two routes indicative that this boom may have been over-egged?
Thai Airways is facing significant challenges
The routes Thai Airways is quitting are all short-haul sub-two-hour routes. Sitting for that period of time on a low-cost carrier isn’t going to kill anyone.
Thai Airways has been trying to turn itself around for several years now. As Live and Let’s Fly notes, the airline loses money on short-haul routes like this in addition to its long haul routes. Its sweet spot are the midrange flights to countries like China and Japan.
Thai Airways is a favorite airline of mine. Sure, it’s a bit unfashionable, but its premium cabins are good, its service is great, and premium cabin seats can be snapped up for bargain cash prices or highly competitive point redemptions. Of course, this is great for passengers like me but the fact that I can reasonably easily do this is suggestive of the underlying financial challenges facing Thai Airways. Unlike many airlines, they don’t play hard to get.
Until Thai Airways manages to pull a rabbit out of the hat and turn itself around, more route withdrawals and the shrinking of a once-great airline may be inevitable.
Simple Flying has reached out to Thai Airways to confirm the dates Thai Smile would take over these six routes but has not heard back prior to publication.