Thai Airways International (THAI) has begun the process of transferring its regional services to its budget subsidiary THAI Smile Airways as part of its rationalisation.
The move will see THAI Smile taking over two routes -- Bangkok-Chongqing and Bangkok-Penang -- from the flag carrier from July 1 and July 16, respectively.
THAI president Charamporn Jotikasthira said THAI Smile would play a greater role in operating flights in this region as THAI concentrates mainly on mid- and long-haul services.
THAI Smile, which until now has operated largely on domestic routes with only four international routes, was mandated to operate to secondary cities in Asean and the region.
The budget carrier plans to launch three new routes in the fourth quarter as it spreads its wings into neighbouring countries.
They are flights from Bangkok to Surabaya and Medan in Indonesia, and Cebu in the Philippines.
However, according to insiders, THAI is not letting THAI Smile solely operate all of its regional routes due to several constraints.
For instance, flights from Bangkok to Yangon and Siem Reap are still operated jointly by THAI and THAI Smile.
Furthermore, Laos is refusing to transfer THAI flights to the country to the airline's subsidiary.
The crux of the problem is Laotian authorities' view that the air traffic rights were extended to the designated flag carrier, not its subsidiary airline.
THAI has tried for years to remove the impediment but has yet to see a positive response.
The flag carrier is transitioning to an all-wide-body fleet and transferring the majority of its short-haul routes to THAI Smile, whose single-aisle A320 jets allow it to operate more economically and better compete with low-cost carriers.
Domestically, THAI Smile operates to nine destinations from Bangkok -- Chiang Mai, Chiang Rai, Ubon Ratchathani, Udon Thani, Khon Kaen, Phuket, Surat Thani, Hat Yai and Narathiwat.
The two other international routes operated by the four-year-old airline are from Bangkok to Changsha and Macau.