Airbus and national flag carrier Thai Airways (THAI) signed a joint venture for MRO facilities at U-tapao Airport in Rayong province, in June 2018. Creating an MRO hub at U-tapao Airport, located in one of the three provinces in the Eastern Economic Corridor (EEC) special economic zone, has been one of the EEC’s flagship projects since its launch under the Thailand 4.0 policy in 2016. Foreign investors see the potential for growth in Thailand’s aeronautical industry in the next two decades. This year, some 7,000 aircraft will fly across the Asia Pacific region, and the number is expected to reach 20,000 over the next 20 years, according to Airbus. “Hence, there is a need to increase maintenance capacity in the Asian-Pacific region,” said Pierre Jaffre, president of Airbus Asia Pacific. The government’s Thailand 4.0 policy and the development of the EEC, he said, present a promising opportunity for Airbus to meet this demand, and has led it to establish an MRO centre in cooperation with THAI in Rayong. “Of all the EEC projects, the MRO hub at U-tapao Airport has the highest possibility for success,” said Phacharaphot Nuntramas, senior vice president for global business development and strategy group at Krungthai Macro Research. This, he explained in an interview with The Nation, is because the aeronautical industry in Thailand has strong fundamentals with more opportunities to grow in the economic environment of the Asean region. Particularly, he said, there has been a growth of smaller airlines such as AirAsia and Vietjet in the region, and the aircraft from these smaller carriers will require maintenance. “The other key MRO centre in the region is located in Singapore, which faces the challenge of limited land space,” he continued. The growth of smaller airlines means that smaller-sized aircraft will be used more often, leading to a growth in the demand for maintenance space” “This market trend presents an opportunity for the MRO centre at U-tapao to rise and become Southeast Asia’s new regional MRO hub,” Phacharaphot stated. Looking at the big picture, the MRO centre is a key plank in the development plans of the aeronautical industry, said Thailand’s former ambassador to France, Sihasak, Phuangketkeow, who helped THAI and Airbus conclude the MRO deal last year, adding that Thailand needs to ensure the sector’s future growth. Thailand has great potential in the sector, as the Kingdom is already a regional aviation hub and boasts a strong automobile and electronics manufacturing base on which to build an aircraft and spacecraft sector, he said. The country has already developed legal instruments to encourage foreign investment, not only for the MRO sector but also for original equipment manufacturers (OEMs), said Sihasak who is now an advisor to the EEC project. “We are improving our ecosystem to accommodate S-curve technology industries,” he said. The TIROS II with Airbus could also be spun off to encourage a future space industry in the country, as the technology transfer could help Thais to develop the sector, he said. The biggest challenge to the long-term development of the MRO centre, like other projects in the EEC, is the imminent lack of skilled labour, Phacharaphot said. Sihasak agreed and added that the country also needed to compete with neighbouring Asean countries, notably Singapore, Malaysia and Vietnam which have had a stronger focus on the aviation and aeronautical industry. “Our strength is that our workforces have a strong commitment to their work and our airbases with huge space, like U-tapao, are available,” he said. “We are also aiming higher to build an ‘aerotropolis’ in the region.” Research has shown that in the next 10 years, the targeted ‘S-Curve’ technological industries in the EEC will require an additional one million workers, with almost 500,000 jobs in demand in the next five years, according to the EEC office. The research also revealed that the aeronautical industry will demand an additional 30,000 skilled workers in the next half-decade. To meet this demand, Phacharaphot suggested, the supply-side will need to quickly develop the appropriate curricula to build a capable labour force to support the growth of the aeronautical industry in the next two decades. An alternative solution is to recruit foreign talent to, for example, operate the MRO centre in U-tapao. The government has been issuing “Smart Visas” since February 2018 to allow highly trained foreign talents working in the targeted ‘S-Curve’ technological industries to work in the Kingdom for up to four years without having to renew their visas yearly. However, adoption of the Smart Visa has been disappointing, with only approximately 100 foreign talents so far having been issued the special visa in the past year, according to the Digital Economy Promotion Agency (DEPA). More importantly, Sihasak said, both the government and private sector should have a clear joint vision and a strong will to get aboard the S-Curve technology industry. The country should have a national mechanism to move this sector forward, he said. “We cannot just wait for foreign investment and technology transfer to develop the aeronautical industry,” he said.
SR Technics Malaysia, the Swiss MRO’s component repair center in the Asia-Pacific region, has had its airworthiness certificate extended for component maintenance by the Civil Aviation Authority of Thailand (CAAT).
The approval, which was granted last month following an auditing process, is valid for three years and will give the company the green light to repair parts under Thailand’s aviation safety body. This covers parts on Thailand-registered aircraft as well as third-parties in the Asia-Pacific requiring CAAT certification.
It supplements more than 800 components repaired by SR Technics in Malaysia approved by regulators such as the FAA, EASA and China’s CAAC, which it received approval from early last year.
SR Technics Malaysia opened in April 2014 and provides component maintenance for Boeing and Airbus aircraft including the Airbus A320 family, the A330, the A340 and the Boeing 737NG.
Thomas Kennedy, vice president component maintenance at SR Technics, says the approval will provide a further boost to the MRO. “The certificate opens up possibilities to further support our customers in Thailand and nearby countries and helps consolidate our business in the competitive Southeast Asia region,” he says.
Airports of Thailand Plc (AoT) aims to develop an "airport city" project at Suvarnabhumi airport at a cost of 11 billion baht.
It will be developed under a public-private partnership scheme, said Pattanapong Suwannachat, chief financial officer (CFO) of the AoT, adding the project will cover 900 rai of the airport's Zone A and 723 rai of Zone B.
According to him, Chinese giant Alibaba Group has expressed interest in building a warehouse since the company realises the growing trend of e-commerce business in Thailand and Asean.
Regarding import duty on products sold online, it would be waived if the items are priced lower than 1,500 baht, and this is a business opportunity for small-scale transport, he said.
"The airport city project could be launched within four or five years," said Mr Pattanapong.
According to the company's CFO, the AoT will also soon sign a memorandum of understanding with an airport in Belgium to set up a facility to check and certify farm products in line with European standards.
"We'll be among the first in Asean to provide this service," said Mr Pattanapong.
He said initially the hub would help certify roses, which are grown in Thailand and mostly exported to China.
AoT reported 33 billion baht in revenue between October and March, up 5% from the same period a year earlier. It also registered a profit of 14 billion baht in the period, up 3.98% from a year earlier.
The rise is earnings stemmed from growth in tourist arrivals, Mr Pattanapong said.
Over the past seven months, the number of passengers handled by AoT airports has risen by 2.2%, he added.
The International Civil Aviation Organisation (ICAO) said Thailand achieved an effective implementation of standards score of 65.07%, which exceeds the minimum pass threshold of 60% set by United Nations' aviation watchdog.
The score was awarded after a full team of ICAO officials carried out a Coordinated Validation Mission on Thailand's civil aviation standards between May 13-22, Civil Aviation Authority of Thailand (CAAT) chief Chula Sukmanop said on Monday.
Thailand was red-flagged by the ICAO in June 2015 for failing to adequately deal with "significant safety concerns [SSCs]" within the specified time frame.
After all 33 SSCs were addressed, the UN watchdog lifted the red flag in October 2017, although a lot still needed to be done to meet international standards across all seven categories -- which comprise rules and regulations, regulatory mechanism, officer authorisation, airside operations, fleet airworthiness, flight services, and airport facilities.
"The country only scored 34.2% when it received the red flag four years ago. Now it has risen to meet the international standards across the board," he said.
Mr Chula said that he believes the US Federal Aviation Administration will also upgrade Thailand's aviation status.
"However, the CAAT still needs more inspectors to test pilots -- especially for ATR aircraft -- before inviting the FAA to reassess our score," he said.
Meanwhile, the contracts relating to the construction of Suvarnabhumi airport's third runway are likely to be signed early next year at the latest, according to Airports of Thailand (AoT).
"The new 21.7-billion-baht runway -- which is included in the airport's second-phase development plan -- has been approved by the cabinet, AoT president Nitinai Sirismatthakarn said.
The AoT is in the process of drafting the terms of reference (ToR) for the runway construction's bidding process, he said, adding the ToR are likely to be forwarded to the company's board for consideration by June or July.
"It could take up to six months to get the bidding process started and select the winner," Mr Nitinai said. "The winner is expected to sign the contracts either by late this year, or early next year."
The AoT is currently working on the project's environmental and health impact assessment, the results of which will be sent to the National Environmental Board for approval, he said.
The process can be done in parallel with the bidding, he said, adding he is confident the report will be approved.
European aircraft manufacturer Airbus has been urged to submit related proposals for the formation of a joint venture with Thai Airways International Plc (THAI) by June 7 to develop the maintenance, repair and overhaul (MRO) facility at Rayong's U-Tapao airport.
Airbus and THAI signed an agreement to jointly invest in the project in June last year. The two organisations are currently discussing details under the joint venture deal. The 11.2-billion-baht scheme is one of the five megaprojects under the government's Eastern Economic Corridor (EEC) drive.
THAI president Sumeth Damrongchaitham said the EEC policy committee has made it clear that Airbus must submit proposals to THAI for the establishment of the joint venture within a month or by June 7.
He said THAI and Airbus still have various concerns to thrash out. Airbus is about to float certain details for discussion later after the agreement is signed, Mr Sumeth said, adding the concerns range from legal elements to management issues.
Referring to THAI's plan to acquire new planes, which are worth 156 billion baht, Mr Sumeth said the airline is in the process of submitting it to the Transport Ministry for consideration.
He said a study is also being carried out for the lease of two to four aircraft. Expedited efforts will be made to wrap up the study, which will be sent to the airline's board for consideration, he noted.
"The leased planes must be used for at least six years so as to break even," said Mr Sumeth. He said the management would ask the airline's board to approve a new Bangkok-Sendai, Japan flight and the proposal is likely to be given the green light.
The management wants the board to approve the new flight plan as quickly as possible in order to seek a budget and map out a timetable for the flight, which would be launched on Oct 27.
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