INDUSTRY NEWS - 4th Civil Aviation SE Asia Summit 2019 -

Airbus poised for take-off in Thailand's MRO hub

2019-02-18

UNCERTAINTY over the political situation in Thailand is apparently not shared by French investors in the aeronautical industry, who have expressed confidence in the Kingdom’s push to become a regional hub for aircraft maintenance, repair and overhaul (MRO).
European aircraft manufacturer Airbus, which first set up shop in Thailand more than 40 years ago, said the MRO sector offered enormous potential for the country’s aerospace business in the coming years.
France Airbus and national flag carrier Thai Airways International last June launched a joint venture for MRO facilities at U-tapao Airport, in a deal overseen in France by junta chief Prayut Chan-o-cha. Prayut is seeking to extend his tenure as prime minister after next month’s election.
The MRO facility at U-tapao is part of the military government’s Eastern Economic Corridor (EEC) strategy and enjoys strong support from the business community, which has called for its continued rollout after the March 24 election.
"We are looking forward to the future as Thailand has good prospects and potential for [developing] the aeronautical industry, given its strong supply chain based on automobile and electronics industries,” said Sihasak Phuangketkeow, a former Thai ambassador to France in an interview with The Nation. Sihasak helped close the MRO deal last year and is now an adviser to the EEC project.
The MRO will be a key piece of the aeronautics industry in Asean, given that many airlines had bolstered their fleets with new planes in recent years and those aircraft now need maintenance, said Cedric Post, the French Aerospace Industry Association’s deputy director for European and international affairs.
Fast-growing budget airlines such as AirAsia and Vietjet continue to add aircraft, which will require maintenance and even overhauls in the next few years, added Post.
The in-service fleets in the Asia Pacific region will grow in size from 6,900 aircraft to over 20,000 in the next 20 years, according to Airbus.
While other Asean members including Singapore have been in the MRO market for a long time, there is still room for Thailand due to its strong automobile and electronics manufacturing base, said Post.
Singapore is short of land and costly while Thailand’s U-tapao Airport is large enough to serve current operations and expansion, he said.
The U-tapao MRO centre will be one of the most modern and extensive in the region, offering heavy maintenance and line services, said Airbus head of marketing for Asia and North America, Joost van der Heijden.
"We will incorporate the latest digital technologies, specialised repair shops and a maintenance training centre,” he added. “For Airbus, our MoU with THAI is about the opportunity to innovate and to lead the way in the aerospace sector.”
When fully operational, the U-tapao MRO centre is to offer heavy and routine (line) maintenance for all wide-body aircraft types, specialised repair shops including for composite structures, as well as extensive maintenance training courses for technical personnel from Thailand and overseas.
Airbus and THAI are still working on the final details of the deal, while already partnering to address the MRO requirements.
"This will be a major new facility that reflects our confidence in Thailand,” said van der Heijden.
Airbus and Thailand’s Civil Aviation Training Centre (CATC) in January signed an MoU on projects to develop and implement maintenance training and pilot training courses in the country.
The goal is to support the development of the country’s aviation industry by helping to ensure a steady supply of pilots, engineers and mechanics for Thailand’s airlines and MRO centres.
Under the agreement, Airbus and the CATC will deepen their cooperation in training aviation professionals within the country. Airbus has begun working with the CATC on basic maintenance training courses, which could be expanded and also include flight training courses for pilots.
"The main challenge [for the aeronautics industry] is to face the growth and train all required technicians and engineers. Airbus is confident that CATC, with Airbus assistance and cooperation, is able to address this challenge,” said van der Heijden.
The MRO centre is a major step forward for Thailand in the new-growth S-curve industries and its grand Thailand 4.0 strategy, Sihasak said, adding that the country’s next government needed a positive vision of its aerospace industry.
"We need good infrastructure, of course, for the future industry as well as consistent regulations to offer conducive conditions for investment,” he concluded.
Somkid hastens mega-projects

2019-02-12

DEPUTY PRIME Minister Somkid Jatusripitak has urged the Transport Ministry to speed up disbursement of its infrastructure investment as planned, while bids will open for six projects in February-March with contracts signed by the middle of the year.
After evaluating the ministry’s major projects that could help stimulate the Thai economy in the first and second quarters of this year, Somkid said investment, particularly in public infrastructure, was the key. Noting a slowdown in disbursement, he asked the Transport Ministry to push the pace of mega-projects. In particular, he asked national carrier Thai Airways International for implementation of its plan to procure 24 aircraft by the end of this month, as well as speedier execution of its maintenance, repair and overhaul (MRO) centre project, which is a joint project with European planemaker Airbus. “This is a period when foreigners want to see the election [in Thailand]. The global export situation is not satisfactory so we have to strengthen the domestic economy. We must fully speed up in the first half of this year and once the election is over, we can carry on,” Somkid said. Transport Minister Arkhom Termpittayapaisith said the ministry would expedite its tasks and push major projects for Cabinet review within the next couple of months.
The ministry’s 21 urgent projects are worth a combined Bt1.29 trillion. Air transport projects include THAI’s Bt160-billion new fleet procurement of 38 aircraft and the Bt10-billion MRO centre, Suvarnabhumi Airport’s Bt16-billion satellite building construction and the Bt15-billion Chiang Mai Airport expansion. Water transport projects are the Bt84-billion third phase of Laem Chabang Port, the Bt23-billion Klong Toey Port expansion, and the Bt5-billion Ranong Port improvement. The rail transport projects extend from the Bt179-billion Thailand-China high-speed railway, to the Bt220-billion high-speed rail which will connect three Thai airports (Don Mueang, Suvarnabhumi and U-tapao), and the Bt77-billion Bangkok-Hua Hin high-speed rail as well as laying double-track rail in several routes. “We have asked THAI to accelerate its new fleet procurement and the joint investment for the MRO centre to be finalised within this June,” Arkhom said. A joint contract signing is expected by June. The contract signing is expected for construction of the second section of the 252-kilometre Thailand-China high-speed rail project within one to two weeks, while bidding for other sections is likely during March-May. The double-track railway – Khon Kaen’s Ban Phai-Nakhon Phanom extension – will be forwarded to the Cabinet for approval by early March and the remaining seven double-track rail projects will be proposed to the Cabinet by the end of that month. Highway Route No 35 (Thon Buri-Pak Tho), Bang Khun Thien-Ekkachai section is reportedly in the bidding process and the contract signing is expected in March. The Rama III-Dao Khanong-Western Bangkok Outer Ring Expressway project is in an international bidding process with bids expected this month and the contract signing in April.
GMF AeroAsia sign parts agreement with Satair

2019-02-01

Garuda Maintenance Facility (GMF) and Satair, a subsidiary of Airbus, have agreed a Letter of Intent (LoT) that confirms the European company as the sole supplier of material support for Airbus’s third party maintenance work at the Indonesian MRO’s four hangar facility at the Soekarno Hatta International Airport in Jakarta.

The terms of the LoI, which were announced late last year, build on a February 2017 agreement between the partners to manage the supply of materials for third party Airbus maintenance checks.

GMF AeroAsia director of business and base operations, Tazar Marta Kurniawan, said the “availability of materials is one of the crucial aspects of maintenance with the partnership. We expect to further increase our support to third party customers by minimizing extended turnaround times because of lack of materials supply.”
Thailand Partners With Industry in MRO Training Pact

2019-01-30

Thailand’s Ministry of Transport is pursuing collaboration with four foreign partners—Airbus, Triumph Aviation Services Asia, Triumph Structures (Thailand), and Senior Aerospace (Thailand)—in a bid to boost its aviation maintenance workforce and expand its MRO capabilities to cater to Asia’s aircraft boom. The aerospace companies will launch four training courses in the areas of aircraft maintenance, aviation structural mechanics, ground equipment maintenance, and aviation communications, with a goal to produce 350 technicians annually by 2021. Thailand’s training capacity remains limited; it produces only some 180 aviation technicians yearly.

Plans call for the newly formed partnerships to support the ongoing expansion plans of joint civil-military U-Tapao International Airport, which authorities have earmarked as an up-and-coming “aerotropolis” and aerospace hub as well as an economic growth driver for eastern Thailand. Plans call for the construction of a new runway by 2021, a third terminal, MRO facilities, a free trade zone, a cargo zone, an aviation training center, and a high-speed rail system connecting Bangkok’s two airports: Suvarnabhumi and Don Muang.

Thailand’s push to partner on training programs comes as Airbus pursues a recent agreement to provide basic maintenance and pilot training courses with the country’s Civil Aviation Training Center (CATC). On January 28, the European manufacturer and CATC inked a Memorandum of Understanding (MoU) to jointly work on training projects to guarantee a steady supply of pilots, engineers, and mechanics for Thailand’s airlines and MRO centers. Under the agreement, Airbus and the CATC will explore adding maintenance courses and ab initio flight training courses for pilots.

The MoU reinforces Airbus’s commitment to strengthen Thailand’s bid to become a major aerospace hub. In June, Airbus and state-owned Thai Airways inked an agreement to establish a new joint venture MRO facility worth $338 million, the cost of which the joint venture and the Thai Navy will share. Asia’s largest low-cost carrier, AirAsia, also wants to establish a $50 million MRO facility at U-Tapao.

In addition to pursuing partnerships on training needs, the Thai government has actively pursued investments from both domestic and foreign companies across all industry sectors. Investment projects rose by 43 percent from 2017 to 2018, amounting to $28 billion and surpassing the investment target set for the year of $22 billion, Thailand’s Board of Investment (BOI) said in a statement on Wednesday.
Airbus and Thailand’s CATC to work on pilot, maintenance training

2019-01-29

Airbus and Thailand’s Civil Aviation Training Center (CATC) today signed a Memorandum of Understanding (MoU) to work together on projects to develop and implement maintenance training and pilot training courses in the country.

Under the agreement, Airbus and the CATC will identify ways in which they can deepen their cooperation in the training of aviation professionals in the country. Airbus has begun working with the CATC on basic maintenance training courses, and this could be expanded to include additional maintenance courses as well as ab initio flight training courses for pilots.

The goal is to support the development of the country’s aviation industry by helping to ensure that there is a steady supply of pilots, engineers and mechanics for Thailand’s airlines and maintenance, repair and overhaul (MRO) centres. Airbus is forecasting a demand for 220,000 new pilots and more than 260,000 new technicians in the Asia-Pacific region over the next 20 years (Global Services Forecast 2018).

“We are pleased to sign this MoU with the CATC, which is Thailand’s leading aviation training institute. Thailand is an important partner for Airbus, as well as one of the fastest growing aviation markets in the region. This allows us to work together to provide the highest levels of training needed to meet the increasing need for qualified aviation professionals in the country,” said Jean-Francois Laval, Executive Vice President, Asia, Airbus.

Rear Admiral Piya Atmungkun, President, Civil Aviation Training Center, said: “We are pleased to sign this MOU and deepen our strong relationship with Airbus in the areas of maintenance training and ab initio pilot training. The combination of Airbus’ world-class expertise and the CATC’s understanding of the requirements of Thailand’s aviation industry means that this has the potential to become a highly successful and long-standing partnership.”

Today’s MOU is part of a long-standing partnership between the European manufacturer and Thailand. Thai Airways International (THAI) is one of the European manufacturer’s earliest customers with a relationship dating back to 1977. Today, THAI and its subsidiaries operate Airbus narrowbody and widebody aircraft including the A320 Family, the A330, the A350 and the A380. Bangkok Airways and Thai AirAsia are also important operators of the Airbus A320 Family of aircraft on their extensive regional network out of Thailand.

Airbus and Thailand deepened their relationship in June 2018, when the company and THAI signed an agreement to work on an MRO joint venture at the U-Tapao International Airport. This facility would be one of the most modern and extensive in the Asia-Pacific region. When fully operational, it would offer heavy maintenance and line services for all widebody aircraft types, specialised repair shops including for composite structures, as well as a maintenance training centre offering extensive courses for technical personnel from Thailand and overseas.

The joint venture would be located at the heart of the country’s Eastern Economic Corridor (EEC), which is part of the Thai government’s Thailand 4.0 policy that is designed to develop world-class innovative technology-based manufacturing and services.
BoI gears up to snare aerospace investors for U-tapao

2019-01-03

The Board of Investment (BoI) has laid out a plan to attract aerospace investment at U-tapao airport in 2019 as part of the government's Eastern Economic Corridor (EEC) development.

The first phase develops 6,500 rai for the airport and an aviation hub, which includes a new terminal to accommodate 15 million passengers in the next five years, a second runway, a business zone, a maintenance, repair and overhaul (MRO) facility, and air cargo space.

The Royal Thai Navy plans to announce a winning bidder for the first phase in March, with the document submission deadline on Feb 28.

The project's construction is expected to be completed by 2023, and operations are to begin by 2024.

The navy also aims to launch terms of reference for the MRO facility's second phase at U-tapao airport in February.

The EEC Office is planning to develop the next step, an "aerotropolis" that stretches 30 kilometres from U-tapao airport. The aerotropolis is a planned location for 600 companies related to the aerospace, medical, fashion and e-commerce industries.

BoI secretary-general Duangjai Asawachintachit said the agency plans roadshows in 2019 to focus on the aerospace industry, one of 10 targeted sectors.

She said the roadshow will be designed to attract investment from Europe and the US to Thailand's aerospace industry, which is still quite new.

The aviation industry is likely to have steady growth over the next 5-10 years, while global aircraft sales are expected to increase 50%, with 20% of that growth coming from Asia.

The EEC Office expects aircraft volume over the next 20 years to reach 40,000, 20,000 of which will be based in Asia.

Thailand will likely benefit from its geographic position and become an aviation hub, making the new MRO pragmatic, Ms Duangjai said.

Applications for investment in the EEC were expected to reach 300 billion baht in the first nine months of 2018.

Applications for the 12 targeted S-curve industries increased by 69% from 525 projects, worth 290.48 billion baht, from January to September in 2018.

Ms Duangjai said roadshows for the other 10 targeted industries were also organised in Japan, China, South Korea and Hong Kong to focus on high-tech industries.

The agency expects BoI applications in 2018 to have reached 720 billion baht.

Regarding big infrastructure projects in the EEC, Ms Duangjai said a high-speed rail linking three major airports and the aviation city both require a large investment, for which companies could not submit applications by 2018 because of a delay in the bidding process.

She said the last quarter of each year normally sees many applications, with 200 billion baht worth of applications being submitted in the last two months of 2017.

The BoI reported 1,125 investment applications over the first nine months in 2018 with a total value of 377.05 billion baht. The number of applications for the period rose 10%, while value rose just 0.8%, from 373.91 billion baht in the same period of 2017.

The agency will report investment conclusions for 2018 and targets for 2019 to the board meeting that will be chaired by Prime Minister Prayut Chan-o-cha on Jan 11.

In 2019, the BoI plans to conduct a campaign to promote a "golden year" for investment, even though the global economy is likely to grow only 4% next year, down from 4.2% this year, a result of uncertainty from the US-China trade war and Brexit.

The BoI board last month approved the policy to attract investors by next year. Investors are required to start operations within 36 months after the BoI issues an investment certificate.

"The agency expects Japanese investment to maintain the No.1 rank in 2019, while China's applications are expected to dramatically increase," Ms Duangjai said.

In the first nine months of 2018, Japanese applications accounted for 240 projects worth 34 billion baht, while China had applications for 55 projects worth 22 billion baht.

Ms Duangjai said the BoI also aims to promote inclusive growth in the economy, through a new policy allowing large companies to help community businesses and smart farmers, not only in the agricultural sector but in tourism, agri-business and One Tambon One Product operations.

The agency plans to cooperate with the government agency on R&D to support local economies by using research to develop their businesses.

Ms Duangjai said the BoI will also focus more on the goals of the Strategic Talent Center to help investors provide valuable expertise for high-tech projects.
New aviation bill to allow 100 percent foreign ownership

2019-01-02

The sky is the limit for aviation companies investing in Thailand as the cabinet of Prime Minister Prayut Chan-o-cha voted in favor of a draft aviation law last week that will allow 100 percent foreign ownership of enterprises engaged in aircraft manufacturing, parts manufacturing, and maintenance, repair and overhaul.

The new law is part of the government’s strategy to raise the Kingdom’s role as an aviation hub and represents another step in the liberalization of Thailand’s aviation sector and foreign investment regime. It would supersede the country’s Air Navigation Act of 1954 that mandated 51 percent Thai ownership of any companies in the three categories.

Aviation and aerospace are among 12 industries targeted by the government for promotion and support under Thailand 4.0, the 20-year national strategy to transform the Kingdom into an economy and society driven by innovation, research and development, and higher technologies. The three-province Eastern Economic Corridor (EEC) near Bangkok is the showcase development zone for the national strategy.

The Kingdom’s location and infrastructure have helped make it an aviation hub for Southeast and East Asia. Bangkok has two high-capacity international airports – Suvarnabhumi and Don Muang – and the development of U-Tapao Airport in the EEC to an international airport linked by high-speed rail to the other two will further advance Thailand’s aviation ambitions.

Nathporn Chatusripitak, an advisor to the Prime Minister’s Office, said that several aviation and aerospace companies have been voicing interest in investing in the EEC and had said they would prefer to able to hold the majority of shares in any possible enterprise. Some have already committed to invest, including Airbus of the European Union, and Britain’s Rolls Royce, which designs and manufactures aircraft engines.

Airbus has entered into a joint-venture agreement with THAI Airways International to build a maintenance, repair and overhaul (MRO) facility at U-Tapao Airport in the EEC. “The new MRO center will be one of the most modern and extensive in the Asia-Pacific region, offering heavy maintenance and line services for all wide-body aircraft types,’’ Airbus said in a press release.

“The facility will feature the latest digital technologies to analyze aircraft maintenance data, as well as advanced inspection techniques, including the use of drones to monitor aircraft airframes,’’ the company added.

The International Air Transport Association (IATA) has forecast that Asia will be the continent with the highest growth in air traffic and in purchases of aircraft over the next two decades, a prediction that bodes well for Thailand’s goal of establishing itself as a premier aviation hub.
Navy to issue U-tapao MRO Phase 2 terms in February 2019

2018-12-21

The Royal Thai Navy aims to launch terms of reference (ToR) for the maintenance, repair and overhaul (MRO) facility's second phase at U-tapao airport in February.

This is the continuation of the airport plan after the navy issued the ToR for the first phase in October.

The first ToR, worth 10.6 billion baht, is for 500 rai, while the second phase will occupy 300 rai.

Rear Adm Krekchai Wajanaporn, deputy of the Royal Thai Naval Institute Library, said the MRO facilities are part of five megaprojects under the government's infrastructure development in the flagship Eastern Economic Corridor scheme.

The 224.5-billion-baht high speed railway linking three major airports and the 55.4-billion-baht third phase of Map Ta Phut seaport were the first two projects, followed by the MRO hub and the 270-billion-baht U-tapao aviation city.

"The MRO's second phase will see local and foreign companies express intentions to invest in a form of public-private partnership, similar to those for Bangkok Airways and AirAsia," Rear Adm Krekchai said.

He said the mobile cabinet has already approved the first phase of the MRO hub.

The second phase is under consideration and the navy will design a difference investment model and consider return on the investment.

The U-tapao aviation city has attracted 42 companies to buy envelopes, with 24 Thai and 18 foreign. The parties include China Communication Construction Co, China Railways Construction Corporation, Malaysia Airports Holding Berhad and Thai Airways International Plc.

The navy plans to announce a winning bidder next March after the document submission process is done on Feb 28, 2019.

The U-tapao airport is a joint civil-military public airport serving Rayong and Pattaya City in Thailand.

The airport is located on 6,500 rai in Ban Chang district, Rayong province, serving as the U-tapao Royal Thai Navy Airfield-Sattahip Naval Base.

U-tapao airport will enhance capacity for greater passenger, freight and flight volumes.

The whole project comprises an airport expansion that will construct a second runway and taxiway as well as the third terminal and development of aviation-related industries that include MRO facilities, aviation training centres, cargo villages and commercial precincts.

The U-tapao airport will be upgraded to serve as the third-largest commercial airport, expecting to handle 15 million passengers in the next five years, 30 million passengers in the next 15 years and 60 million passengers in the next 20 years.

Earlier, the cabinet approved the construction of the second runway for 17.76 billion baht and aviation control tower at 3 billion baht.

"The U-tapao airport will serve passenger growth in Southeast Asia, as it is set to be the aviation hub for this region," Rear Adm Krekchai said.
Thai aerospace industry is ready for take-off

2018-11-05

Aviation and aerospace industry is growing rapidly worldwide. Thailand takes the advantage from this trend as well as its aviation market leadership to bring its aerospace and aviation industry to new heights.
According to its Commercial Market Outlook 2018, Boeing forecasted that in the next 20 years, Asia Pacific will become a major market where fleet of aircraft would be increased 2.8 times from current fleet of 6,139 aircraft to 16,977 aircraft in 2036. This trend will boost demand for commercial aviation services, ranging from supply chain support (parts and parts logistics) to maintenance and engineering services, aircraft modifications and airline operation services. The center of such business, which is now in North America and Europe, will shift to Asia Pacific in the next 20 years.
Huge opportunity is presented to Thailand
Thailand, with its strategic location in the heart of Southeast Asia, is already an aviation hub of the region. The continuous growth in the tourism industry and national economy has driven the country's air traffic to increase three times faster than the global market. In 2017, the number of aircraft movements at the main airports operated by Airports Authority of Thailand Plc (AOT) grew by 5.41% to 833,084 flights. Considering passenger movements, the number of passengers handled at the AOT's airports grew by 9.37% while freight and postal parcel volume increased by 9.68%.
Together with the increasing aircraft and passenger movement, the country's 38 commercial airports, diverse international and local airlines operating in the country make Thailand one of the fast-growing maintenance, repair, and overhaul -- MRO -- services industry and several companies involved in the manufacturing business.
Considering such high potential, the Thai government has included aerospace in the targeted industries that will promote national competitiveness and Thai economic transformation. Thailand's Board of Investment (BOI) also promotes the industry by offering investment incentives to aviation-related activities, namely manufacture and repair of aircraft or aircraft parts, manufacture of aerospace devices and equipment, aerospace operating systems, air transportation services, etc. Investment projects in this category are granted 8-year maximum corporate income tax exemption.
With all supports already in place, 51 projects from 26 companies have been promoted under aircraft part manufacturing activity while 16 projects have been promoted under aircraft and part maintenance and repair activity.
EEC Aerotropolis -- the catalyst
Thailand's aerospace industry is ready to take off and fly high as the development of the Aerotropolis, or an Airport City, in the Eastern Economic Corridor (EEC) is on the fast lane. A comprehensive roadmap of U-Tapao Airport and other facility development is clearly laid out. Once completed, the face of Thailand's aerospace industry will be changed.
The comprehensive Aerotropolis development plan includes U-Tapao Airport expansion plan, under which its total capacity will be increased from 5 million passengers per annum today to 54 million passengers in the next 30 years. New passenger terminal and runways will be built to support this expansion. Other facilities to support the aerospace and aviation industry include a custom free zone, the train system linking Suvarnabhumi, Don Mueang and U-Tapao airports, the development of an ICD in Chachoengsao, Laem Chabang Port Phase 3, Map Ta Phut Port Phase 3 and dual track train projects.
In support of EEC Aerotropolis development, BOI offers additional 2-4 years corporate income tax exemption for investment projects in targeted activities that have cooperation with an educational institution to develop human resources.
MRO
At the heart of the Aerotropolis, the 10-billion-baht Thai Airways International's MRO Campus, a cooperation between THAI and Airbus, will be built. Located on an area of 83 acres on the east of runway 2 at U-Tapao Airport, the facility will have the capacity to provide comprehensive services from traditional to predictive and prescriptive maintenance of a wide variety of aircraft from all makers. The MRO will have the capacity to provide maintenance service to 80-100 aircraft per year in the first 20 years.
The TG MRO Campus, when complete in 2023 will become one of the most advanced, state-of-the-art facility in Asia. It will use advanced technology like Big Data & Analytics, Maintenance Information System, Aircobot (computer + robot) for aircraft inspection, 3D printing, etc. Of course, this indirectly means more technology transfer and people development activities.
With state-of-the-art facilities and technology, the MRO will become another MRO hub for Asia, mainly serving airlines in Thailand and the Asia-Pacific. It is hoped that the project will in the future capture 4% market share in this industry in Asia.
The supply chain
Seeing Aerotropolis taking shape, local related industries are enjoying opportunity to lift their capability from local suppliers to advanced aerospace part suppliers.
The aerospace industry will enormously benefit from the country's huge pool of more than 2,000 tier 2 and 3 local automotive and electronics manufacturers and suppliers. These companies have high potential, experienced workers with good knowledge, and skills. By applying some advanced technology and knowledge, they can upgrade their skill and capability to transform themselves into aerospace part suppliers.
Mr. Remy Maitam, President, Triumph Aviation Services Asia, Ltd., a repair and overhaul service provider based in Thailand, said, "We see tremendous growth in the size of aviation fleet in Southeast Asia, which in turn raises demand for aviation services. Thailand has world-class infrastructure, quality workforce with excellent craftsmanship as well as efficient government, which makes perfect ecosystem for our business. Attractive tax incentive, easy process for work permit application for our expats, business friendly environment, and healthy lifestyle, all make investing in Thailand a pleasant experience for us in doing business in the heart of the fastest growing economic region in the world."
Thai’s Sumeth faces first leadership test

2018-11-01

Thai Airways International (THAI) new president, 53-year-old Sumeth Damrongchaitham, received a dictum from Thailand’s Deputy Prime Minister, Somkid Jatusripitak, when he took over at the carrier in September: complete a new rehabilitation plan for the airline within three months.
It’s a tall order. Last year, the carrier posted a 29.8% drop in operating profit, to $88 million, despite achieving its highest load factor in a decade. But passenger yields fell 7% and when one-off expenses were included for the year, net losses were $63.7 million.
Sumeth told local media the plan aimed to increase revenue from the airline business, catering, and a new MRO facility at U-Tapao airport. THAI’s share of the local market has declined by 10%, to 27%, in the last five years. “The airline business sees relatively stiff competition because of rising numbers of airlines and air routes. The rehab plan needs to increase market share”, Sumeth said.
It also has to make a final decision about an order for 23 new aircraft, both wide and narrow bodies, at an estimated book value of US$3 billion. “I cannot yet reveal any details because the company is in the process of revising the purchase plan. The company’s aircraft purchases need to be revised to conform with its business plan,” Sumeth said.
“The company expects to conclude the purchase plan in 45 days before undergoing vetting by the National Economic and Social Development Board and cabinet approval. The plan to buy new aircraft is a vital part of THAI’s restructuring plan. The purchase is deemed essential to increase the potential of THAI’s airline business,” Sumeth said.
The U-Tapao maintenance centre is a central plank in THAI’s recovery plan. Sumeth said a winning joint venture partner will be secured by next February; a statement that has caused some confusion. THAI signed a Memorandum of Understanding with Airbus in June, but Sumeth said an “auction” was required because Boeing had expressed interest in being involved.
This is a switch in position from June this year when the then acting THAI president, Usanee Sangsingko, said at the MoU signing in Toulouse that “THAI and Airbus have undertaken extensive studies to validate the business plan for this exciting project”.
She continued: “Together, we will develop one of the most advanced and efficient aircraft maintenance centres anywhere in the world.”
Airbus Commercial Aircraft president, Guillaume Faury, said: “We are pleased to enter into this agreement with THAI. This will further strengthen the long-term partnership between our two companies and also contribute to the success of Thailand’s new eastern economic corridor.
“With the fleet of wide-body aircraft in the Asia-Pacific set to triple at around 4,800 airplanes in the next 20 years the project represents a sound business opportunity for both our companies.”
The joint venture is scheduled to be operating within five years. THAI is dismantling the existing U-Tapao MRO facility to provide space for the airport’s second runway and a new passenger terminal.
THAI said the new complex will use “smart hanger” technology that will offer MRO services to five wide-body aircraft and two narrow-bodies and any one time. It will include heavy air-frame maintenance and base maintenance, line maintenance, aircraft painting, other modifications and component maintenance.
Estimated to cost $320 million, it will include a contribution of $192 million from the government, THAI needs to attract joint venture partners to provide the remaining $128 million needed to complete the project.
“The MRO will become significant in generating income to THAI, while the internal rate of return is estimated at 14%, which is quite high,” Sumeth said, and added an estimated income of $6 billion over 50 years from the facility would support THAI’s ambitious to be a national premium airlines.

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