Aergo Capital has taken delivery of one new 737-900ER (MSN 43188) aircraft from Boeing and leased the aircraft on a long-term lease to Thai Lion Air, part of the Lion Air Group. PK AirFinance, together with the Korean Development Bank, provided funding for the transaction on delivery.

“We are delighted to close our sixth aircraft transaction with the Lion Air Group and we are excited about working with Thai Lion as it expands its international operations,” said Fred Browne, CEO of Aergo Capital.

“We appreciate the great support of Aergo who is currently a lessor to 3 airlines within the Lion Air Group, across various aircraft types in a short timeframe. We look forward to deepening and strengthening this relationship further,” commented Edward Sirait, CEO of Lion Air Group.

Captain Darsito, Managing Director of Thai Lion Air, noted, “The B737-900ER is perfect for the Thai market and great for our business development. Currently we are flying to 12 cities in Thailand and 13 international routes. We hope to keep expanding our network with the support of great partners like Aergo Capital.”

Smith, Gambrell & Russell (English counsel), A & L Goodbody (Irish counsel), Mochtar Karuwin & Komar (Indonesian counsel), Clifford Chance (Thai counsel) and KPMG (tax consultant) acted for Aergo Capital while Thai Lion Air availed of the in-house legal team at Transportation Partners. Clifford Chance acted as lead counsel for Lenders.

Lufthansa Technik AG is filling important leadership positions to support its continued expansion in Asia Pacific (APAC).

Following the successful restructuring of the local sales organization, the Aircraft Overhaul and Component Services divisions will now also be managed directly from the region. With Elmar Lutter, one of the company's most experienced top managers is taking over the Aircraft Overhaul division in Asia Pacific. He will assume his new position on 1 June and work from Manila in the Philippines. During the course of his international career, Lutter has headed production departments within Aircraft Overhaul in Hamburg and Manila and worked as the CEO of Lufthansa Technik Budapest. Most recently, he was responsible for establishing and managing Lufthansa Technik Puerto Rico.

Burkhard Pfefferle-Tolkiehn, who will head Asia Pacific's Components division as of April 1, has chosen Hong Kong as his base. He has spent many years working in leadership positions within the Component Services division, most recently as Vice President in Hamburg, where he was responsible for the global material supply to more than 800 Lufthansa Technik customers.

With Gerald Steinhoff, Lufthansa Technik's sales organization relocated top management functions to the region as early as 2014.

Working from Singapore, Steinhoff and his team established new regional sales structures for Lufthansa Technik that have already brought impressive successes, resulting in annual revenue growth of over 20 percent.

These most recent staffing decisions are the next step in Lufthansa Technik's growth program in the Asia Pacific region. The company is following up its ongoing efforts of building and expanding production sites by establishing a local leadership structure directly in the region - in close proximity to the customer.

The Asia Pacific region is particularly important for the company, and has boasted growth rates in the double digits for years now. Extensive contracts for component supplies and landing gear overhauls were recently concluded with Go Air and Air India, for example. Initial successes have also been achieved with the new aircraft types - for example, with China Airlines as the first A350 customer for component supply in APAC. Many customers in the region have been working with Lufthansa Technik for years. The new appointments will now bring these cooperations to a new, local level.

The government will prioritize the development of U-Tapao airport as the cornerstone of the Eastern Economic Corridor, the new development zone east of Bangkok that will showcase Thailand’s advancing digital economy, along with a high-speed railway linking the area to Bangkok, the deputy prime minister in charge of the economy said last week.

The two projects are among five major infrastructure developments planned by the government for the three-province zone that policymakers consider essential for the future of the nation in terms of its economy, competitiveness and development. Aside from serving as a home to advanced industries, the Eastern Economic Corridor, or EEC, will also contain model, green communities for a better and more sustainable standard of living.

Aerospace and aviation are among the advanced industries that will be headquartered in the EEC. Therefore, the development of U-Tapao, an airport once used by the United States military, has been prioritized, both for its role in spurring the growth of aerospace and aviation in Thailand and for the major part it will play in linking the corridor with global markets through transport and logistics.

THAI Airways International has announced its intention to build the region’s finest aircraft maintenance, repair and overhaul facility at U-Tapao, and last week European aircraft maker Airbus signed an agreement to invest in the new facility.

“The government will accelerate the joint aircraft-repair center between Thai Airways International and Airbus and arrange regulations for public-private partnerships to shorten the EEC implementation period to three months,” said Deputy Prime Minister Somkid Jatusripitak, who oversees the economic ministries.

Thai Airways International (THAI) and Airbus this week signed a Memorandum of Understanding (MoU) to jointly “evaluate” development of a new MRO facility at Thailand’s U-Tapao International Airport, south of Bangkok. The MoU was formalised on Wednesday by Thailand’s deputy Prime Minister, Somkid Jatusripitak, Airbus Commercial Aircraft president, Fabrice Brégier, and THAI acting president, Usanee Sangsingkeo.

The proposed MRO hub will offer line and heavy maintenance services and utilize digital technology analysis of aircraft maintenance data. In addition it will offer clients UAV inspection of airframes, a repair centre for composite structures and a maintenance training centre for Thai and regional technical staff.

“This is a major milestone in our long and mutually beneficial relationship with THAI that dates all the way back to our earliest days at Airbus when THAI became one of our first customers in the 1970s,” Brégier said. “With the fleet in the region set to almost triple to over 15,000 aircraft over the next 20 years, this project represents a sound opportunity for Thailand to develop its footprint in the aerospace sector.

“We predict fleets operated by Asia-Pacific carriers will more than double in size in the next 20 years, from around 6,000 to more than 15,000 aircraft. All these aircraft will need to be serviced on a regular basis, representing a huge business proposition. In fact, we estimate the value of the MRO sector in this region alone will stand at around US$640 billion over the next decades

“THAI has been studying the development of a new MRO business with several potential partners and is pleased to reach this initial agreement with Airbus,” interim THAI president, Sangsingkeo said. The Thai government has prioritised aerospace and MRO sector as key industries in its ‘Thailand 4.0’ economic reform and innovation drive.

Thailand’s aviation regulator has threatened to immediately deregister aeroplanes leased to some of its carriers, in a bid to tackle ingrained industry malpractices that have seen domestic airlines deliberately default on lease agreements and then refuse to return the aircraft to foreign lessors.

The Civil Aviation Authority of Thailand said in a statement on 2 March that it would revoke the registration of all aircraft that are operated by national carriers, where the airlines are embroiled in litigation with foreign lessors over delayed rental payments.

Although most Thai-based carriers lease commercial aircraft from foreign lessors, the regulator warned that in some cases this practice is being abused by operators who take advantage of lengthy legal proceedings to default on rental fees but avoid terminating the lease, which in turn delays the return of the aeroplane and any outstanding payments, allowing the airline to extend its use of the aircraft without paying.

The regulator said this has been a problem for five years and it was unwilling to wait for individual cases to settle before taking action. The regulator has the authority to deregister any aircraft under its jurisdiction.

The regulator refused to identify any ongoing lawsuits or the names of the carriers it plans to target, but said it was necessary to protect the country’s scrupulous airlines from paying unreasonably high rental fees and facing difficulties when trying to lease aircraft from foreign lessors.

“Long judicial proceedings may in practice prevent the lessor or the registered owner of the aircraft from resuming the full use of the aircraft or enter into a new transaction with a new lessee,” the regulator said in a statement. This “delay tactic” has been employed by carriers with poor finances to avoid paying their debts until ongoing litigation is resolved, the regulator added.

Deregistering the aircraft in question is necessary to protect the credibility of the regulator, the nation’s aviation sector and its legal system, in order to regain the trust of foreign lessors, the regulator said.

Before commencing its deregistration drive, the regulator has promised to conduct meetings with the foreign lessors and domestic lessees that are involved in ongoing litigation, inviting them to present evidence to support their claims.

If it becomes clear that a lessor has legally terminated a lease agreement and has declared its intention to break its contractual relationship with a domestic carrier, the regulator said it will revoke the registration of the aircraft, allowing the lessor or actual owner of the aeroplane to re-register the asset overseas.

John Frangos, an aviation law consultant at Tilleke & Gibbins in Bangkok, said the regulator’s efforts are timely, as certain lessees continue to expend considerable effort retaining possession of the owner’s aircraft in an attempt to game the legal system.

“Some smaller Thai-registered charter carriers have defaulted on their aircraft lease agreements and then continue to try and hold on to the aircraft after lease termination and, in some cases, after deregistration,” he said.

Government agencies, investment organizations and industry power players in Thailand are pooling their resources together through public and private partnerships to create Asia’s next major aviation hub. With passenger traffic expected to triple in the Asia-Pacific region over the next two decades, public and private aviation figures see Thailand as a potential aviation hub rival to Singapore.

Last week, Thailand’s Transport Ministry unveiled a development plan between 2017 and 2031 split into three phases. The first phase between now and 2021 will focus on building a new maintenance, repair and overhaul (MRO) center for Thai Airways. The second phase focuses on the continued expansion of that MRO center through 2026, and the third phase will focus on expanding Thailand’s aviation design and manufacturing capabilities.

The Board of Investment of Thailand invited journalists from all over the world on a four-day tour of its involvement in the above mentioned plan, which is part of a broader plan to grow public and private industrial capabilities around manufacturing embedded electronics, smarter cars, robotics and other technologies. During the tour, the agency unveiled a plan to invest $5.7 billion into expanding both the runway and aircraft hangar and maintenance capacity at U-Tapao International Airport serving the Thai cities of Rayong and Pattaya.

The starting place for Thailand’s push to become Asia’s next major aviation hub, that airport was first constructed with the help of the U.S. Air Force more than 50 years ago to support its involvement in the Vietnam War. In 2014, the airport was transitioned into a joint civil-military airport, which caused the number of annual passengers using the airport to jump from 168,000 that year to 750,000 in 2016. To support the expansion in growth, terminal two is now nearing completion.

Thai Airways provided a tour of its current MRO facility at the airport and discussed future plans for modernizations. According to Natthapat Sreshthaputra, chief production engineer for the aircraft overhaul department at U-Tapao, Thai Airways envisions building a “smart hangar.” Among the capabilities it would introduce is the use of drones to inspect aircraft fuselages for structural damage. The international carrier also wants to improve its ability to prepare for aircraft MRO activity for its own airplanes landing at U-Tapao.

“Before the aircraft even lands, we want our engineers to see pilot reports about any hardware or software malfunctions on their iPads, so that we can be ready to address the problem and get the aircraft back into the air quickly," says Sreshthaputra. "We will be investing in acquiring new technologies to make this a reality."

Repair and overhaul of auxiliary power units (APU) will be one of the future core capabilities of Thailand’s aviation industry. Last week, global investment firm The Gores Group that its Gores Small Capitalization Partners has completed the acquisition of Triumph Group Inc.’s U.S. APU MRO business, Triumph Air Repair and Triumph Engines. The completion of the transaction for the APU Overhaul Operations of Triumph Aviation Services — Asia is expected to close in March. The combined businesses have been rebranded as TurbineAero, Inc., which will operate two facilities, one in Chandler, Arizona, and the other in Chonburi, Thailand.

Rob Higby, former VP of sales and marketing for StandardAero's airlines and fleets division, was recently named CEO of TurbineAero.

“Everybody knows the aerospace hub within Asia is Singapore," says Higby. "Singapore has done a phenomenal job of being that international switching hub for all the OEMs, most of the MRO shops all the things that bring aviation together. What Thailand has started to do very well for [Thailand's Board of Investment], and for all the other efforts, is make it inviting to build a business here, to grow a business here."

Prime Minister Gen. Prayut Chan-o-cha has approved the plan for expanding U-Tapao International Airport and Sattahip Commercial Port. 

The Prime Minister chaired a meeting with related agencies on logistics development along the east coast, emphasizing the importance of developing the area for industrial and tourism growth. 

Transport Minister ACM Prajin Juntong summarized the industrial growth of the east coast, currently valued at 1.4 trillion baht. His ministry plans on developing logistics infrastructure, transforming the coastal area into the region’s maritime transportation hub. 

Gen. Prayut called for increased connectivity between U-Tapao, Don Mueang and Suvarnabhumi Airports, as well as expanding Juk Samet Port. He also approved the plan for expanding U-Tapao International Airport and Sattahip Commercial Port. 

The Prime Minister urged officials to hear out local stakeholders and foster an understanding among the public that the projects will enhance the competitiveness of the country and create a sustainable economy.

Thai Airways International Pcl is seeking an alliance with as many as 10 other Asian carriers in order to add destinations and counter a similar move grouping together several of its low-cost rivals.

A series of bilateral accords could unite airlines from across the region to boost connectivity in India and China and smaller markets such as Myanmar and Vietnam, Charamporn Jotikasthira, Thai’s president, said in an interview. The company lacks the cash to expand its network via acquisitions, he said.

The plan signals a move away from simply siphoning more connecting traffic through Bangkok as envisaged in Thai’s two-year turnaround strategy, Jotikasthira said, and comes after the formation last month of the Value Alliance coalition of eight budget carriers spanning Japan to Australia.

“Demand has been changing,” the executive said in Dublin. “All the requests on air traffic control into Thailand has been point-to-point to secondary cities. The model that we’ve been preaching in the past is going to be different.”

Malaysia Moves

While leading Asian operators such as Singapore Airlines Ltd. and Cathay Pacific Ltd. remain global players, other flag carriers have reached the same conclusion as Thai. Malaysia Airlines Bhd. is more advanced with moves to turn Kuala Lumpur into a regional hub and says it will order new planes to ply under-served short-haul routes in the next few months.

The Value grouping, while set to be the world’s biggest alliance of low-cost airlines, may not trouble Thai unduly, since it brings together smaller players including Singapore’s Scoot and Cebu Pacific Air of the Philippines that have a combined fleet about the same size as local low-cost No. 1 AirAsia Bhd.

Any Asian pact involving Thai must complement its role in the Star Alliance, Jotikasthira said, adding that he wants to expand relationships with existing partners including Star leader Deutsche Lufthansa AG after Thailand escaped possible blacklisting in a European Union safety review in December.

Thai, which plans to remain a full-service carrier, is also open to interlining and code-sharing “with anyone, any range,” the executive said last week at the International Air Transport Association’s annual gathering.

Chula Sukmanop, director general of the Department of Airports and director of the Civil Aviation Authority of Thailand, said businesspersons and government officials in four provinces, namely Beung Kan, Mukdahan, Pang Nga and Kanchanaburi, have suggested that an airport be built in their respective provinces. 

The Department of Airports will conduct a feasibility study on such projects and decide if they will be worth investing and whether any airlines will eventually use the sought-after airports in those provinces.