AirAsia Group has confirmed it will invest US$150 million (4.8 billion baht) in a maintenance repair overhaul (MRO) facility at the Eastern Economic Corridor's U-tapao airport.
The facility, to be completed in one year, will serve as a maintenance centre for all 200 of AirAsia Group's aircraft in the region.
Tony Fernandes, group chief executive, said the company would make the investment after meeting with Deputy Prime Minister Somkid Jatusripitak Wednesday.
"We can immediately begin the project once the Thai government approves it," he said. "But it will still take a month to reach a final agreement with partners and about 12 months to construct the facility."
Thailand is a significant destination for AirAsia investment because of the high potential of its tourism industry.
AirAsia, Asia's largest low-cost carrier in terms of passengers carried, operates 200 aircraft in Thailand, Malaysia, Indonesia, the Philippines and India. That number is projected to grow to 300-350 in the next five years.
The MRO facility will offer services to other airlines and is forecast to attract 10-20 supporting firms to invest in Thailand.
The company is seeking parties to invest in the construction of U-tapao's 1.5-billion-baht low-cost terminal project, which will take 12-18 months to build.
"AirAsia should not invest and operate the low-cost terminal because it may affect the operations of other airlines," Mr Fernandes said.
The company asked the Thai government to reduce U-tapao's airport tax to 200-250 baht from 400, saying the lower tax will attract more visitors to Thailand.
Mr Somkid said the government will consider the airport tax cut proposal, which he said would depend on the ability of AirAsia to attract visitors to Thailand.
The firm has established Thailand as its human resources, accounting and purchasing headquarters.
U-tapao's capacity can be raised to 20-30 million passengers (equal to that of Don Mueang airport) in the next five years, once a high-speed railway links all three airports.
The company's two aircraft at U-tapao service nine routes. AirAsia plans to add two aircraft a year to its U-tapao fleet and expects to add 400 aircraft by 2025.
"By that time, the company will operate long-haul routes from Korea, Japan, China, Australia and Europe," Mr Fernandes said.
A PLAN by Thai Airways International (THAI) for a showpiece aircraft maintenance centre in the Eastern Economic Corridor (EEC) – intended to cement the country’s status as a regional aviation hub – is edging closer to reality, with a feasibility study due to be completed this month.
The project for the aircraft maintenance, repair and overhaul (MRO) centre at U-Tapao International Airport is being led by the national carrier, which will operate the facility in a joint venture with a yet-to-be selected aircraft manufacturer.
Planned to open in 2022, the so-called MRO Campus is billed as a world-class facility that will further entrench Thailand’s standing as an aviation hub in the region and help propel the development of the flagship economic zone that hosts it.
Ronnachai Wongchaoum, vice president of the TG MRO Campus Project Office Department at Thai Airways International Plc (THAI), said the airline expected to submit the feasibility study for the project to Prime Minister Prayut Chan-o-cha by this month or the next. Prayut, who chairs the Eastern Economic Corridor Management Committee, would decide whether to approve the project in principle.
“We want to develop the No 1, world-class MRO centre, which will be the best in terms of on-time and on cost considerations, as well as on quality,” Ronnachai said.
Occupying a 210-rai plot, the MRO Campus will require investment of about Bt11 billion, with Bt7 billion earmarked for construction and the rest for equipment. The design work is scheduled to start from June and will take about one year, before construction can begin.
The MRO Campus will be owned and invested in by the Royal Thai Navy under a right granted by the Treasury Department. The campus will be operated by THAI and the joint venture partner under a leasing contract of 50 years.
The MRO Campus will open officially in June or July 2022, and employ between 500 and 800 workers, including technicians. The maintenance centre will have a capacity to handle between 50 and 80 heavy maintenance events annually.
The centre’s payback period will be between five and 10 years when annual income is forecast to reach Bt3 billion. The MRO Campus’ annual income from aircraft maintenance services is expected to exceed Bt22 billion within the next 50 years. U-Tapao airport itself is expected to attract an increasing number of visitors, jumping from around 30 million a year now to 60 million in the next five years.
“We (THAI) have already approached the biggest of the two major aircraft manufacturers to become our joint venture partner in the MRO Campus project in U-Tapao,” Ronnachai said.
“We have got a positive response from a European company that is looking for a prime location in Southeast Asia to set up a maintenance, repair and overhaul centre. For us, we would like to have technology transfers and customers from the aircraft maker.”
“We need to find an aircraft manufacturer as our joint venture partner so as to benefit from the transfer of maintenance technology and management know-how.”
Ronnachai said the envisaged 50:50 joint venture agreement between THAI and the plane maker that will emerge as its partner in the MRO Campus project is expected to be signed by the end of this year.
He said that the aircraft maintenance business in the Asia-Pacific region shows strong growth potential, driven by an increasing number of aircraft in the region, including those being operated by the major airlines.
There are about 20,000 aircraft in operation globally and the number will increase to 35,000 within the next 20 years, according to predictions from the big major aircraft manufacturers.
“There are also 6,139 aircraft being operated in the Asia Pacific, including China. In the next 20 years, 14,276 new aircraft will be added into the region,” Ronnachai said.
“Meanwhile, about 3,438 existing aircraft will be discharged from the Asia Pacific region in the next 20 years. As a result, the actual number of aircraft operated in the region, including China, will be 16,977 in the next 20 years.”Ronnachai said that each aircraft will have a lifetime of between 24 and 30 years on average, and are typically operated by premium airlines for the first 12 years before they are sold to other airlines or air service providers. Each aircraft will see about four to six years of operations before entering major maintenance. Each round of such maintenance would cost about Bt25 million, Ronnachai said.
Thai Airways International (THAI) has taken delivery of its twelfth and final A350-900. It entered revenue service this week. The airline received its first A350 in August 2016. THAI has no additional widebody aircraft on order from Airbus and Boeing, but that is bound to change.
The state-controlled airline is due for a widebody order and Orient Aviation understands that more A350s, but also more B787s, will join the carrier’s fleet. THAI is replacing older B777s, B747s and A330 with A350s on flights to Australia, Europe, the Middle East and on regional services particularly to Japan.THAI operates six A380s, 12 A350s, 10 B747-400s, 32 B777s, 15 A330-300s, six B787-8s and two B787-9s. Some of its B787s, including its first -9, remain grounded because of Rolls-Royce Trent 1000 issues. The airline’s Thai Smile subsidiary has 20 A320ceo.
Vietnam Airlines has signed a Memorandum of Understanding (MOU) with ST Aerospace for a component MRO solutions joint venture (JV).
The two firms also have agreed a 14-year component Maintenance-By-the-Hour (MBH) for the airline’s 58 A321ceo and 20 incoming A321neo in component maintenance beginning mid-year. Under the MBH contract, ST Aerospace will set up an inventory base in Vietnam to provide timely services to the airline.
The JV will be based at Noi Bai International Airport and initially will offer pneumatics, hydraulics and electrical components support and will then consider commencement of aerostructure and airframe MRO.
“We are happy that Vietnam Airlines has decided to entrust their A321ceo and A321neo fleets to us for component support, and even more so by the prospect of deepening our partnership with the exploration of a joint venture. The robust development of the economy and a burgeoning middle class have created an ideal environment for the growth of the aviation industry in the Asia Pacific region, and Vietnam’s double-digit growth in the air travel sector is the best reflection of this,” said ST Aerospace president, Lim Serh Ghee.“We are delighted to partner with ST Aerospace to establish a joint venture as well as to provide MRO support for the A321 aircraft family, which is the majority of our fleet. This partnership not only improves our fleet efficiency and world-class service quality, but also represent a major step forward for Vietnam’s aviation industry in general, contributing to the boost of bilateral economic, trade and aviation relations between Vietnam and Singapore,” said Vietnam Airlines EVP, Dang Ngoc Hoa.
Airports in every corner of Thailand will enjoy renovation and expansion as part of efforts to boost travel to secondary provinces
The government's plan to spend more than 38 billion baht to renovate and expand 29 airports nationwide is a big step towards improving infrastructure, boosting air traffic in secondary provinces and strengthening local tourism business.
The investment will also give airlines a chance to expand their networks and let private jet firms extend more options to high-end travellers.
Airports Department director-general Darun Sangchai said the department has held discussions with Thai Airways International (THAI), Nok Air, Thai Lion Air, Thai AirAsia, THAI Smile and Bangkok Airways about airport expansions.
"We will renovate or expand 29 airports over the next 9-10 years under a budget of more than 38 billion baht," Mr Darun said.
The plan is aimed at increasing air travel capacity, enhancing connectivity among secondary provinces and linking small cities with the capital and other major tourist spots in Thailand and Southeast Asia.
The airport expansions are in line with the government's goal of boosting tourism in 55 secondary provinces by offering tax breaks of up to 15,000 baht for tourism spending made during trips to those provinces this year.
While the Tourism Authority of Thailand estimates that the tax campaign could draw at least 10 million visitors to the 55 provinces this year, the Airports Department also expects the scheme to spur use of domestic airports.
Airports that will see expansion include those in Krabi, Khon Kaen, Surat Thani, Ubon Ratchathani and Phitsanulok. Once the expansions are completed, these airports will have the capability to accommodate large aircraft such as the Boeing 747.
Some 29 airports will be improved to serve medium-sized aeroplanes, including in Lampang, Hua Hin and Ranong.
The department is currently expanding Mae Sot airport in Tak province, to be completed in 2019. In the South, Betong airport in Yala is under construction.
Airline operators are upbeat about expanding their networks into secondary provinces and plan to add new links such as Udon Thani-Chiang Mai and Ubon Ratchathani-Phuket, while using U-tapao airport as a new hub to connect with other provinces and overseas destinations.
Some airlines are also mulling whether to add commercial flights to Pattani, Tak and Chumphon provinces, Mr Darun said.
He said the department has encouraged investors to finance a private jet airport not far from Bangkok, perhaps in Nakhon Pathom, to capitalise on the growing high-end market.
Thai AirAsia sees the airport expansions as a great business opportunity. The budget airline vows to operate at all airports and take a lead role in booming domestic tourism.
Tassapon Bijleveld, chief executive of Thai AirAsia, said many provinces can be promoted as new hubs to link with neighbouring countries, especially the CLMV group (Cambodia, Laos, Myanmar, Vietnam).
Thai AirAsia operates at nearly every airport in the country, save for those in Hua Hin, Nakhon Ratchasima and Phetchabun.
Mr Tassapon has advised governments in Southeast Asia to endorse a single visa to attract more visitors.
One of the crucial projects in the government's much-touted Eastern Economic Corridor (EEC) is to pour 236 billion baht over the next five years into developing U-tapao airport and linking it with Suvarnabhumi and Don Mueang airports via high-speed rail. The effort is part of a push to make Thailand an international aviation hub.
The EEC committee also agreed to establish an "eastern aviation city", or Aerotropolis, in the vicinity of U-tapao airport, complementing infrastructure such as motorways, deep-sea ports and the high-speed railway linking the three airports.
Andrew J Wood, president of Skal International Thailand, an association of professionals in the tourism business, said the Aerotropolis project could help Thailand become a regional aerospace hub.
"Thailand's aerospace industry is growing exponentially, with air traffic rising at a rate three times faster than the global market and doubling every 15 years since the early 1980s," Mr Wood said.
The EEC Aeropolis will feature an airport city surrounding U-tapao airport, plus industrial areas, an airline MRO centre (for maintenance, repair and overhaul), and facilities to support the tourism business.
According to Mr Wood, there will be an inner ring road stretching 10 kilometres from U-tapao airport to facilitate the aviation city, and an outer ring road to support logistics activities and connect companies with other transport systems in the EEC provinces of Chon Buri, Chachoengsao and Rayong.
He said the EEC Aerotropolis project will strengthen Thailand's MRO capabilities.
The investment value of the MRO centre is expected to reach US$10.6 billion (349 billion baht) through 2024.
Major aerospace companies already present in Thailand's EEC area include Chromalloy, which supports commercial aviation engine manufacturers, and TurbineAero, which was chosen in February by Boeing to provide aftermarket support in the Asia-Pacific region.
The Board of Investment provided more information on investment opportunities in the aerospace industry and the MRO sector in Thailand at an April trade show in the US.
Chokedee Kaewsang, deputy secretary-general of the Board of Investment, said the passage of the EEC bill is a crucial development for the aerospace sector, which has been drawing strong foreign investment over the past few months.
In February, Rolls-Royce signed an agreement with THAI to offer testbed capacity for the airline, a move that the engine maker described as a crucial building block for its growth in Asean.
That same month, Airbus announced a partnership with Thai Aviation Industries in which Airbus will support all of Thailand's law enforcement and military helicopters for the next two years.
Sikorsky, a Lockheed Martin company, also announced that Thai Aviation Services would serve as its customer support centre.
While infrastructure improvements are under way, the private sector is being urged to brace for digital tourism and the cashless society to keep abreast of market trends.
Kalin Sarasin, chairman of the Thai Chamber of Commerce, said the chamber and business allies have worked for a range of strategies under the Digital Tourism Platform set for launch this year.
The strategies include a downtown VAT refund counter, an Amazing Thai Taste showroom, entertainment ticket, online hotel booking, and online package and optional tour.
The first project, starting in the second quarter, will let foreign tourists claim VAT refunds at counters located in shopping centres such as Siam Paragon, CentralWorld, The Emporium, Central Chidlom and Robinson Sukhumvit. Later it will expand to other tourist destinations such as Phuket, Chiang Mai and Pattaya, Mr Kalin said.
The Amazing Thai Taste showroom will let operators showcase Thai food and use QR code for payment. That project will be launched by the third quarter of this year, along with the entertainment ticket that lets tourists buy entertainment admission online.
The last two projects, online hotel booking and online package and optional tour, are set to go live in the fourth quarter.
Mr Kalin said the Digital Thailand Platform is aimed at providing convenience to tourists during their stay in the country, especially those young travellers who use smartphones and digital devices.
The chamber's statistics show that 87% of tourists coming to Thailand use the internet for surfing information before booking, 64% of them do travel planning online, 43% of them read and study reviews before coming, and 42% purchase tourism services online.
There is work to be done to help tourists enter Thailand more conveniently, Mr Kalin said.
The Thai government earlier revoked the Tor Mor 6 immigration form for Thai people travelling in and out the country. The chamber proposes scrapping the form for foreigners as well.
Chanin Donavanik, head of a working group for Mice (meetings, incentives, conventions, exhibitions) under the public-private collaboration called Pracha Rat, urged the government to speed up development of new tourist attractions.
Remodelling the old capital of Ayutthaya is one task, Mr Chanin said.
"Looking at Japan, they made their old capital Kyoto an attractive site that draws millions of visitors year round," he said. "Thailand should do the same."
Also, Hong Kong, Dubai and Singapore have been developing many new magnets to lure international visitors.
According to Mr Kalin and Mr Chanin, efforts to make Thailand one of the best destinations in Asia will only succeed with full cooperation between the government and the private sector.
The two agreed that the Thailand Riviera, a project that recently received the green light from the cabinet, could be a new magnet drawing tourists to the west coast of the Gulf of Thailand, home to Hua Hin and Cha-am.
The Thailand Riviera project was dusted off after the cabinet approved a high-speed railway linking Bangkok to Hua Hin. The study of the train project is under way, with bidding documents to be finalised and sent to the cabinet for consideration this year.
The government also has plans to extend the route of the high-speed railway from Hua Hin down to Chumphon and Ranong provinces.
Ten months after handing over the first 737 Max 8, Boeing has now delivered the second major variant in re-engined single-aisle family with Thai Lion Air taking the first 737-9 in a 21 March ceremony in Renton, Washington.
The stretched single-aisle powered by CFM International Leap-1B engines completed a 10-month certification effort in January, clearing the way for the Lion Air subsidiary to accept the first aircraft from Boeing.
"The 737 has been the backbone of our business since we began and we will use the added capacity the airplane provides to expand our network and start additional routes to Bangladesh, China and India," says Darsito Hendro Seputro, chief executive and chairman of Thai Lion Air.
Another Lion Air subsidiary, Malindo, took delivery of the first 737-8 and launched operations last May.
In addition to a stretched fuselage, the 737-9 includes the same package of upgrades that Boeing introduced with the Max family. To reduce fuel consumption, Boeing replaced the CFM56 on the 737NG family with the Leap-1B, added the dual-feather Advanced Technology winglet and resculpted the tail cone into a cleaner, circular shape.
"The Lion Air Group is the perfect example of how the 737 Max family provides a common fleet solution across the single-aisle spectrum," says Boeing Commercial Airplanes president and chief executive Kevin McAllister.
The first delivery of the the 737-9 comes five days after the next major variant in the 737 Max family flew for the first time. The shortened 737-7 is scheduled to complete certification testing by the end of the year and enter service in 2019.
The 737-10, a further stretch of the 737-9, will enter service a year later.
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