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 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.
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.
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.
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.
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."
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