We are about to come full circle with Thai Airways and its “low cost” unit of Thai Smile that took into the skies in 2012 and later flew under its own code WE without any benefits for most Star Alliance frequent fliers (later joined as Connection Partner).
Thai Smile has overtaken most domestic and short-haul regional flights. Thai Airways won’t operate to many of these destinations where it flew wide bodies previously (lack of a lift at the moment).
The Thai Airways board has decided that to cut losses, the best course of action is to merge Thai Smile with its parent (and probably retire the brand altogether). The earliest this could happen is at the end of this year.
Thai Airways only operated a few single-aisle aircraft to Koh Samui (not sure if any other destination) and widebody aircraft to all other destinations, including those short flights between Bangkok and Phuket.
Singapore Airlines recently folded its SilkAir subsidiary into the mainline, and Thai Airways plans to do the same.
This would be a piece of welcome news for all Star Alliance frequent fliers because once Thai Smile is swallowed by its parent Thai Airways those Star Alliance Gold benefits again apply, such as extra luggage allowance, lounge access, and priority boarding + earning miles.
Thai Smiles was supposed to be a budget carrier (original plan). Still, in reality, it is a full-service airline, part of Thai Airways, that only flies to regional destinations on single-aisle aircraft.