Thai Airways International Public Company Limited (THAI) has made progress on the selection of private investors that will invest in THAI’s Maintenance, Repair, and Overhaul (MRO) facility at U-Tapao (UTP). An additional working group has been appointed to support the proceedings of the selection committee on private investors.
Mr. Sumeth Damrongchaitham, THAI President, said THAI as the project owner of the Maintenance, Repair, and Overhaul (MRO) facility at U-Tapao (UTP) has sent an updated list of qualified private investors to those concerned and is the process of providing responses to these potential investors within February 2020.  The selection committee has agreed to allow the Eastern Economic Corridor  Office (EECO) to designate a committee to support the operations, which includes evaluation and negotiation of the private investors’ proposals in technical and financial areas.  Another committee will negotiate conditions of the draft investment contract.  These tasks will be conducted with transparency and caution, in accordance with the Terms of Reference (TOR) and the EECO’s announcement.  It was agreed that THAI should be responsible to appoint a committee that will accept and collect documents from TOR bidders, whereby those who express an interest may submit the required documents by 6 March 2020.  Based on the committee’s proposal, information gathered will be checked and evaluated.  Eligible private investors will be selected by May 2020.

BBS Joint Venture has been awarded the U-Tapao International Airport and Eastern Airport City projects for offering the highest returns to the state, Admiral Luechai Ruddit, commander-in-chief of the Royal Thai Navy, said on Thursday (January 30) in his capacity as president of the selection committee.

“BBS offered Bt305.555 billion as returns to the state, while the Charoen Pokphand-led Thana Holding Consortium offered Bt102.217 billion and Grand Consortium proposed Bt100.903 billion,” he said. “We have asked BBS to prepare the contract details and technical specifications for approvals by the committee and the Cabinet, which is expected to be completed by March,” Luechai said.

The BBS Joint Venture includes Bangkok Airways (which has a 45 per cent stake), BTS Group Holdings (35 per cent) and Sino-Thai Engineering and Construction (20 per cent).

The U-Tapao International Airport and Eastern Airport City project will cover the development of 6,500 rai of land in and around the airport. The government will invest Bt20 billion in civil works for a second runway and a second air traffic control tower, while the private partner will invest Bt270 billion in the construction of the third passenger terminal, ground transportation centre, logistics and cargo complex, cargo village for a free trade zone and a commercial centre.

Deputy Transport Minister Thaworn Senneam discussed the open sky policy and emphasised the importance of increasing revenue and reduction of expenses for Thai Airways International Pcl (THAI) to turnaround its fortunes and become a sustainable operation in the future.

Thaworn, Jua Ratchasri, assistant secretary at the Ministry of Transport, along with other officials visited THAI's headquarters to follow up on policy implementation and take stock of the situation.

Thaworn also looked at operational problems and obstacles faced by THAI in improving its financial results and becoming one of the world’s leading airlines. He followed up on the ministry’s policy, such as turnaround plan and business plan, acquisition plan for 38 aircraft, company management and structure, the U-Tapao aircraft maintenance centre, plans to boost revenue and operating results. Additional policies were also presented, such as human resource management, managing company property to extract maximum benefit, manage and improve sales and marketing between THAI and Thai Smile.THAI president Sumeth Damrongchaitham said they were acting on the policies issued by the Transport Minister, which will be used in resolving accumulated financial losses and achieving longstanding profitability. He said progress was being made on some of the projects.THAI is reconsidering its long-term plan for 2019-26 to acquire 38 aircraft. THAI’s board of directors approved the plan to acquire the aircraft to replace 17 aircraft that will be decommissioned, which must be suitable for the financial situation and altered conditions. The management will study aircraft types and present the results to the board in February 2020. The company will present information on the number of aircraft, acquisition methods and investment sources for consideration of the board at their meeting in March. This plan will help the company to grow continuously and not be a financial burden. It will be presented to the Ministry of Transport by March 31.Regarding the Maintenance, Repair, and Overhaul Centre (MRO), THAI has sent information on bidding to investors. The deadline for submission of proposals is March 6, to enter into the negotiation process, conclude the selection results and draft the PublicPrivate Partnership Agreement (PPPA) that would be submitted to the Office of the Attorney-General and the Eastern Economic Corridor (EEC) Policy Committee. After that it will be proposed to the Cabinet in August. The company expects to sign the PPPA with the bid winner by the end of August. It is expected that the new MRO centre at U-Tapao will be operational by April 2023.

Meanwhile, negotiations are going on between the THAI and Rolls Royce over demand for damages. THAI is seeking compensation from Rolls Royce for the period THAI’s aircraft was not operational as they were awaiting spare parts, resulting in damages and lost business opportunities.The company is working on increasing revenue according to the Middle Turnaround Plan (2020-24) through innovation and digital technology, implementing modern technology in various projects such as TG Digital Technology, sales development plan and boosting of ancillary revenue in order to improve online sales. THAI is in the process of implementing cost reduction and cost control as well as organisational restructuring.

Thai Airways International will evaluate wet-leasing as one of the possible ways to finalise its plan to add 38 aircraft using its approved budget of THB156 billion bahts (USD5.1 billion), Thai Transport Minister Saksayam Chidchob said.

As reported by the Thai Post daily, Saksayam underlined at a press conference that the debt-ridden flag carrier must get on with the long-planned fleet renewal this year.

He said that the airline should explore all options, including buying aircraft, as well as dry- or wet-leasing them. Saksayam added that any regulatory obstacles to long-term wet-leasing will be removed by the government if Thai Airways chooses this option.

Thai Airways has been working on its fleet renewal for at least two years now. In 2018, it suffered a set back after the National Economic and Social Development Board (NESDB) criticised the previous plan. Then, in mid-2019, the government gave its go-ahead in principle, although the details of the carrier's fleet renewal and larger restructuring are still being worked out. In a recent interview with ch-aviation, President Sumeth Damrongchaitham said that the final version of the plan will be ready by the end of the first quarter of 2020.

According to the ch-aviation fleets advanced module, Thai Airways' fleet currently includes fifteen A330-300s, twelve A350-900s, six A380-800s, nine B747-400s, six B777-200s, six -200(ER)s, six B777-300s, fourteen B777-300(ER)s, six B787-8s, and two B787-9s. The bulk of the aircraft is owned by the airline except for all B787s, eight B777-300(ER)s, and eleven A350-900s. Wholly-owned subsidiary Thai Smile operates twenty A320-200s, of which fifteen are dry-leased.

Transport Minister Saksayam Chidchob has given the green light to loss-making Thai Airways International Plc (THAI) to purchase and lease 38 new aircraft for an estimated 136 billion baht, despite objections from the workers' union.

He said the aircraft acquisition will definitely go ahead because it is a necessary investment, adding an assessment would be conducted to ensure the new planes boost the national carrier's competitiveness.

The acquisition is opposed by THAI's workers' union, which fears the project will add further strain to a company facing accumulated debt of more than 100 billion baht.

Despite the crippling debt, Mr Saksayam said THAI must invest because the existing fleet is ageing, describing it as a bold move that the national carrier has to make to survive.

He said THAI is also being asked to work out a new pricing strategy to increase its competitiveness.

"If we don't invest and instead let the business run at a loss, it will stay like that," he said, adding that Deputy Transport Minister Thaworn Senneam would supervise the acquisition plan.

The transport minister played down a spate of reported resignations by board chairs of state enterprise agencies, saying this was normal during a government transition.

THAI's board chairman, Ekniti Nitithanprapas, has reportedly submitted his resignation.

Mr Saksayam said state enterprises under the Transport Ministry will be evaluated via key performance indicators (KPIs) compiled by the Office of Transport and Traffic Policy and Planning.

"The rules are simple: the evaluations will be based on KPIs from the day they take office. If efficiency improves and business results are positive, nobody will question them [the boards]. If efficiency drops and accumulated losses increase, they should leave and let others do the job," he said.

The transport minister also said that talks to legalise app-based ride-hailing services will be finalised this week, but insisted the operators should be Thai-owned businesses so as to ensure enforcement of regulations and tax payments.

He said conventional taxi operators had nothing to fear if their services were up to scratch.

The national carrier is undergoing a rehabilitation plan, including cutting back on internal expenses and boosting digital marketing, he said after a meeting with THAI and Thai Smile Airways executives on Thursday.

THAI president Sumeth Damrongchaitham said staff are gathering additional information on the airline's plan to buy or lease 38 new aircraft, estimated to cost 130 billion baht, before sending the details to the cabinet for approval.

He believes the rehabilitation plan will pay off and THAI will start to make a profit within three to five years.

The rehabilitation plan is aimed at addressing its almost 100 billion baht debt that has accumulated over the past 10 years.

The measures include procuring new aircraft and improving services.

Mr Sumeth said THAI also plans to promote Otop products by selling them on flights, adding the carrier also plans to start allowing passengers to check in four days to two weeks in advance.

Meanwhile, acting chief executive officer of THAI Smile Chartia Leelayuth said the airline will ask its parent, THAI, to increase capital in the fourth quarter of this year for use as a revolving fund to tackle the low-cost carrier's losses of about 14 billion baht.

The study together with domestic hearings suggest that Thailand has the potential to host an air show to include civil, commercial and military aviation, said Nichapa Yoswee, senior vice-president for business at the Thailand Convention and Exhibition Bureau (TCEB).

The event will also help promote the aerotropolis, one of the megaprojects planned for the Eastern Economic Corridor, she said.

The location of U-tapao airport, which spans areas in Rayong and Chon Buri provinces, could be a suitable venue because of ample accommodation in the area, especially in Pattaya, a city that hosts meetings, incentives, conventions and exhibitions, Ms Nichapa said.

The industry hearing organised recently by the TCEB gathered ideas from 17 agencies in public and private sectors in aviation-related associations and educational institutions.

The agencies include the Eastern Economic Corridor Office, Thai Airways International, Bangkok Airways, the Thai Exhibition Association, the Aerospace Engineering Department and Kasetsart University.

According to the study and industry hearings, Thailand's maintenance, repair and overhaul (MRO) sector is strong, with average growth of 11.8% a year, which is higher than the global rate (5.1%).

The study also revealed Thailand's aerospace industry expertise, which could support the aviation market on the strength of major international MRO and aerospace manufacturing companies operating in Thailand, including Rolls-Royce, Airbus, Senior Aerospace and Ducommun Technologies.

Local subcontractors need to improve aviation manufacturing supply chain from Tier 3 to Tier 2, which entails making more high-end parts like propellers, the study said.

One of the most important factors for Thailand to host air shows is support from the state sector because such events require a large budget.

Ms Nichapa has encouraged the government to sign a 20-year contract with Farnborough International to nominate the company as organiser for the shows, which typically take place every two years.

"International air show events can serve as concrete evidence of how ready Thailand is, in terms of the potential to host global Mice events as well as the capability of the local workforce as an MRO hub in the aviation business," she said.

The initial duration of such an event is four days, featuring 200 exhibitors and 15,000 trade buyers together with 60 aircraft.

The TCEB expects to stimulate spending of 1.4 billion baht from the air show and could create 920 jobs for locals.

The A220-300 is one of the newest single-aisle aircraft of the Airbus family. While the A320neo is the company’s best-selling model, the A220-300 is a complement for destinations with softer demand.

Airbus has more than a 60% market share in the region’s single-aisle market, with more than 3,000 jets flying for 80 different carriers and over 1,500 on order for future delivery.

Christine De Gagne, marketing director at Airbus, said the new equipment should maximise the profits of airlines because now they can fly a smaller jet instead of leaving the seats empty. The efficient design with 20% lower fuel burn per seat highlights the capability of minimising the cost of operations amid fierce competition.

The 100- to 150-seat market is one of the promising segments in the next 20 years, Ms De Gagne said. According to Airbus’s forecast for Asia-Pacific, the demand for this size of single-aisle jet will grow to 7,000 in the next 20 years. Of that number, Airbus aims to take at least a 20% share.

“The A220 family will fill the gap between large single-aisle and regional aircraft, and the range of time which this aircraft can fly is up to 7-8 hours,” Ms De Gagne said. “The lighter weight also means the capability of using a smaller airport in Thailand such as Samui airport, for which we ran a test flight once.”

Korean Air and Air Vanuatu are the first two customers for the A220 in Asia-Pacific. In the global market, Airbus has 551 orders from 21 airlines after delivering 78 aircraft to five airlines.

The accumulated flight hours are more than 200,000, with some carriers using the jet its maximum of around 18 hours a day.

The A220 family consists of the smaller A220-100 and larger A220-300, which are the only passenger aircraft purpose-built for the 100- to 150-seat market.

In Thailand, Airbus has 153 aircraft in service under leading brands such as Thai Airways International, Bangkok Airways, Thai AirAsia and Thai AirAsia X.

Among the popular models are the A320 family, which mainly serves the short-haul route. For long-haul destinations, there are the A330, A350 XWB and A380, connecting Asia with Europe.

Airbus also insists on a pledge to keep safety standards under the scrutiny of the European Union Aviation Safety Agency. The A220 gained approval for 180-minute flights for the extended-range twin-engine operational performance standard, which means it can fly over oceans in the region.

“Thailand is standing out as one of the leading markets in Asia-Pacific,” Ms De Gagne said. “Airbus hopes new aircraft in the fleet will help the airline kick-start with appropriate demand before expanding to the bigger jet in the family when the time is right.”

Turkey’s flag carrier Turkish Airlines commenced a new codeshare partnership today with Thailand’s Bangkok Airways. With Turkish being the only airline to connect the two countries, it is hoped that the new codeshare will provide passengers with convenient connections from Turkey to within Thailand and Southeast Asia.
The agreement covers 16 of Bangkok Airways’ routes including both domestic routes within Thailand and international routes. Two routes of interest covered by the codeshare are the domestic Bangkok and Samui to Phuket routes as Phuket is a popular Thai tourist destination for international visitors. The new codeshare will help people from more places around the world access Phuket.
In addition to the 16 routes currently covered by the codeshare, two more routes are pending government approval, Bangkok-Phnom Penh, Cambodia and Bangkok-Siem Reap, Cambodia, routes. This helps Cambodia to become better connected with Europe as there are currently no nonstop flights between the country and the European continent.
Bilal Ekşi, Turkish Airlines’ general manager, said in a statement about the agreement: “Turkish Airlines is pleased to strengthen the long-lasting commercial cooperation with Bangkok Airways by expanding it with a codeshare agreement. As one of the important gateways to Asia Pacific in the region, our passengers will benefit and enjoy greater convenience when connecting to popular Thailand domestic destinations as well as other neighbouring exciting travel destinations via Bangkok.”
In addition, the President of Bangkok Airways Puttipong Prasarttong-Osoth said “Bangkok Airways is very pleased to work with Turkish Airlines, a leading international airline as the codeshare partner to strengthen our respective route networks. This will offer business and leisure travellers enhanced connectivity and seamless access while travelling in Thailand and our neighbouring countries. Moreover, Turkish Airlines’ passengers travelling on Bangkok Airways will enjoy the boutique airline’s unparalleled services such as lounge access and in-flight meal.”
Just next week, Turkish Airlines will be increasing the frequency of its Bangkok services from two daily flights to three by adding a new Airbus A330-300 service on to the daily schedule. Additionally, the airline will also be upgrading its Istanbul to Phuket service to daily from September up from six times per week, also be operated by the A330-300.

Lufthansa Technik Philippines, the country’s largest aircraft maintenance, repair, overhaul (MRO) operation, mulls expansion of its facilities in Manila with $40 million in new investments that would hire 300 workers in addition to the existing 3,200 headcount even as it noted that the tax and fiscal incentive package granted by the Philippine Economic Zone Authority (PEZA) helps them cope with stiff competition in the Asia Pacific region.
Trade and Industry Secretary Ramon M. Lopez revealed this after his meeting with Lufthansa President and CEO Elmar Lutter.
According to Lopez, the company is planning a 9,000 square meter expansion in the area worth $40 million and will add 300 jobs. The expansion will be completed 13 months after they award the contract.
At present, Lufthansa enjoys fiscal and non-fiscal incentives. PEZA-registered enterprises are entitled to income tax holiday (ITH) and 5 percent gross income tax after the ITH. They are also entitled to zero duty importation of capital equipment, tax deduction on the training expenses and employment of foreign nations.
During the meeting, Lutter informed Lopez that the incentive package “helps Lufthansa deal with challenges in such as stiff competition in the Asia Pacific Region and the logistical costs of operating in an island country.”
Lopez said he fully supports Lufthansa’s MRO expansion plans. These expansions, he said, will help the Philippines become and aerospace and MRO hub in the Asia Pacific.
“The Philippines is positioning itself as the hub for aerospace manufacturing and aftermarket services in the Asia Pacific Region. We have the young, educated, and highly-trainable workforce that is a boon to investors. If we achieve this goal, we can increase our high-value exports and provide decent jobs to more Filipinos,” said Lopez.
Lutter said that the global MRO market is expected to continuously grow by 4 to 5 percent per year, one third of which will come from the Asia Pacific Region.
Lutter further said that job opportunities in other industries and the growing global demand for MRO skilled workers may lead to a labor shortage in the Philippine MRO industry.
Filipinos, he said, are known as skilled aircraft mechanics not just in the Philippines but in the world. “The competitive advantage of the Philippines is its people,” he added.
Lufthansa Technik Philippines, a joint venture of Lufthansa Technik AG (51%) and MacroAsia Corporation (49%), is located at the center of Southeast Asia, within a four-hour flight radius of major international hubs in Asia such as Singapore and Hong Kong. MacroAsia is owned by taipan Lucio Tan, who owns the country’s flag carrier Philippine Airlines.
Within a special economic zone at the Ninoy Aquino International Airport, its facility occupies a total area of 229,000 square meter lot in Villamor Airbase employing 3,200 people. It maintains 3 hangars capable of servicing up to 6 wide-body and 3 narrow body aircraft at a time, and 9 apron parking slots.
Its hangars are equipped with platform systems, overhead cranes, and engine, tail and wing docks. Modern and process-oriented workshops support aircraft overhaul, major modifications, cabin reconfigurations, and aircraft painting.
Based on its website, the company specializes in base maintenance for the A320 family, A330, A340, A380, and Boeing 777 aircraft types. It provides line maintenance services to a wide range of customers. The base maintenance service spectrum includes cabin reconfiguration/retrofit programs and lease return checks available as a stand-alone product or integrated into long-term contracts.
It is precisely this capability that has enabled Lufthansa Technik Philippines to successfully implement the A330 cabin reconfiguration project which contributed to PAL’s achievement of their upgraded 4-star airline rating from Skytrax.
Through our satellite offices in Cebu, Clark, Davao, Palawan and Aklan, the company provides aircraft line maintenance support to domestic and international airlines.