Thai Airways is working with Nok Air to launch a new low-cost carrier by mid-2013.
A consultant has been hired to conduct a feasibility study which is expected to be complete by the end of July, says a Thai spokeswoman when contacted.
The new carrier will be a joint venture between the Star Alliance member and Nok, in which Thai owns a 49% stake. It will have a registered capital of 200 million baht ($6.4 million).
"Thai will be the majority shareholder, but the percentage of shareholding is unconfirmed," adds the spokeswoman.
Though the routes that the new carrier will ply have not been confirmed, it is understood that it will focus on the regional market.
The carrier is expected to help Thai compete against low-cost carriers, such as Thai AirAsia, which have been gaining market share.
"This new low-cost carrier will be different compared to Nok Air and THAI Smile, as Nok Air is a budget carrier with strength in domestic markets, whereas THAI Smile is a light premium carrier with regional services," explains the spokeswoman.
The carrier will be the next airline operated by Thai, following the launch of regional subsidiary THAI Smile on 7 July with twice daily services on the Bangkok-Macau route.
The flag carrier had earlier tried to compete against low-cost carriers in the market through a proposed joint venture with Singapore's Tiger Airways. The Thai government however, did not give the green light for the Bangkok-based joint venture.
Former president of Thai Airways Piyasvasti Amranand also told Flightglobal last month that the carrier still needs to get into the low-cost market as Nok Air "hasn't been able to sufficiently help us stop the erosion of the domestic market".