Prime Minister Prayut Chan-o-cha will meet UK Prime Minister Theresa May and French President Emmanuel Macron during his Europe trip later this month to promote economic cooperation.
Gen Prayut is scheduled to meet the British premier on June 20 and the French leader on June 25, the last day of his trip, Deputy Prime Minister Somkid Jatusripitak said yesterday. A group of business people will also join the trip.
On Feb 12, British Foreign Secretary Boris Johnson paid a courtesy visit to the PM and invited him to visit the UK. He promoted UK expertise in science and innovation in aviation, education and security. Meanwhile, Thailand invited investors from the UK to invest in the Eastern Economic Corridor. On April 5, British's secretary of state for international trade, Liam Fox, visited Thailand and the visit resulted in the idea to set up a joint committee to look into economic cooperation, Mr Somkid said.
On June 25 when he meets the French president, Gen Prayut will follow up on cooperation matters after Thai Airways International (THAI) signed an agreement with Airbus to study business opportunities in aviation maintenance, repair and overhaul (MRO) centre at U-Tapao Airport with an initial investment value of 2 billion baht.
Thai Airways International PCL’s new chairman will be a senior official from the Ministry of Finance tasked with coordinating between the flag carrier and its majority owner, a senior government source said on Friday.
The government will appoint Ekniti Nitithanprapas as chairman of the board of directors “soon”, the person said, who declined to be identified as the matter was still confidential.
Ekniti currently heads the ministry’s revenue department. His brief is to “coordinate” between the ministry - which owns 51 percent of the airline - and incoming chief executive, Sumeth Damrongchaitham, to enhance efficiency, the person said.
Ekniti, who headed the ministry’s State Enterprise Policy Office from 2015 to 2018, will replace the acting chairman, Air Chief Marshall Treetod Sonjance.
The new leadership comes during the final phase of a restructuring plan which began in 2015 and was aimed at restoring profitability. The airline is one of several major state-controlled firms to undergo reform since the military government assumed power in 2014.
Thai Airways reported a net loss in 2017 and a 14 percent fall in net profit for January-March.
The government has expressed confidence that investors will be drawn to a massive project that will see U-Tapao International Airport redeveloped as part of an overall plan for an Eastern Airport City.
Industry Minister Uttama Savanayana recently conveyed the government’s optimism for the project – a key element of the Eastern Economic Corridor (EEC) – when he revealed that the terms of reference (TOR) for the development would be released soon. An Industry Ministry source this would happen by July.
The project will be opened to private companies to compete for work on the aviation facilities that will cover 570 rai.
Demonstrating its conviction, Thai Airways International (THAI) has allocated Bt10 billion for investment in the development of a maintenance, repair and overhaul (MRO) centre on 210-rai plot within the complex.
“Even though the development of U-Tapao International Airport and the Eastern Airport City has been delayed as a result of waiting for the implementation of the Eastern Economic Corridor Act, which became effective in the middle of this month, we are quite confident that we will get the names of investors for different projects for the development of U-Tapao International Airport and the Eastern Airport City this year,” Uttama said. “Under the original timeframe, the invitation for private sector to invest in the U-Tapao project was to be conducted between March and June this year and the names of those who win the bids would be announced in September.
“Then, the contracts will be signed in October this year. However, you can see our urgency to make progress, such as for the high-speed train project that will connect three airports, Don Muang, Suvarnabhumi, and U-Tapao. We have just announced the invitation for interested private investors to participate in the bidding, and they are invited to respond by June 17.”
Kanit Sangsubhan, secretary-general of the EEC Office, said that Prime Minister Prayut Chan-o-cha on June 4 will chair a meeting of the policy committee of the Eastern Special Economic Zone, which will be the first such meeting since the EEC Act took effect. “At the meeting, the plan and strategy for the U-Tapao airport and the Eastern Airport City project will be offered for approval. The aim is to push the U-Tapao development project to be fully completed at the same time as the high-speed train project that connects the three airports,” Kanit said.
A source from the Ministry of Transport said that the TOR documentation would be released by July, paving the way for the bidding process for the MRO centre at U-Tapao airport. The source indicated that the framework for the TOR would be set with sufficient flexibility to encourage many private companies to participate in the process.
“THAI previously indicated a likelihood that it would manage the whole aircraft maintenance facility at U-Tapao airport in partnership with Airbus,” the source said. “However, the national carrier recently informed us that it would occupy about 200 rai of the space, out of the whole 570 rai plot, for their own MRO Campus. Due to many land sites remaining vacant in the facility, it is a sign that the government will open the bidding widely to any private investors that are keen to set up their own MRO facilities in the area, and for them to join immediately in the project.”
U-Tapao Airport Authority director Rear Admiral Luechai Sri-Eamgool said that the development of U-Tapao airport and the Eastern Airport City would consist of existing service areas in which the government will allocate additional investments, such as a second runway, an aviation training centre, and an infrastructure system to cater for expansion.
The airport development will also open new service areas, including the government’s investment in the first phase of MRO centre and air cargo in cooperation with THAI, and the first phase of the training centre for aviation personnel in cooperation with Civil Aviation Training Centre.
He said that after the first-phase development, the second-phase projects will enable the investment by private companies. They include the Passenger Terminal 3, the Commercial Gateway, air cargo, the second-phase development of the MRO centre and the training centre for aviation personnel, and a free-trade zone facility for the aviation industry and the business sector.
For the progression of the development, the advisory team is adjusting the design of the airport space after finding that the design for the second runway, which is under the first-phase development plan, puts it too close to nearby mountains and a motorway.
The adjustment will see the design enhanced and the new design of the airport space will be finished in June. After that, the airport development project will be submitted to the government for consideration and then enter into the stage that will be opened for private firms to participate in.
“We are confident that within the fourth quarter of this year, we will be able to open the bidding process and have the names of private firms that will awarded concessions in all investment projects on the development of the 6,500-rai plot at U-Tapao airport,” said Luechai.
“For the development of the MRO centre, THAI has informed us of its intention to utilise only 200 rai of land,” he said. “So, it is possible that the remaining area will be allocated to other private investors, who are interested to develop their own MRO facility. However, it depends on the government’s policy towards the matter.” Luechai said that THAI had previously expressed interest in the air cargo project, but the authority has not yet received direct contact from the online on its current intentions for air cargo.
The Royal Thai Navy, which owns the site for the air cargo facility under a right granted by the Treasury Department, has returned the budget for designing the air cargo facility back to the government. It is also possible that the authority may take back this land and seek bids from private companies. Luechai said U-Tapao International Airport can handle about 20 million passengers a year using its single runway of 3,500 metres. The existing passenger terminal can cater to about 700,000 domestic and international passengers a year, and this number would increase to 20 million after the completion of the overall project, Luechai said.
FL Technics is growing its footprint in Asia-Pacific with plans to establish base maintenance facilities in China and Thailand.
Speaking at Aviation Week Network’s ap&m summit in London on Tuesday (May 29), Zilvinas Lapinskas, CEO of FL Technics, says the company expects announcements within the next two months for a base maintenance facility in at an unconfirmed location in China, which will be the result of a joint venture with a local company.
It will also establish a presence in Thailand to carry out heavy checks with a similar plan to partner with local vendors to start a joint venture, Lapinskas says. “The agreement is about to be signed and it will take around one and a half to two years to open the hangar,” he says. “Our plan is to open four to five bays including one slot allocated for painting.”
FL Technics’ expansion in Asia-Pacific, a region estimated by Aviation Week Forecast data to grow at an annual rate of 4.8% over the next decade, follows the opening of its Indonesia operation in Jakarta in late 2016, where it operates a base and line maintenance center located close to the city’s Soekarno-Hatta International Airport.
The 9,000m2 facility holds capacity for up to three narrowbody aircraft simultaneously and holds approvals for Boeing 737 classic and next-generation aircraft, along with Airbus A320 family variants.
Lapinskas says its continuing expansion plans emanate from the growth of the fleet in the Asia-Pacific region. “We were looking at the growth of the Asia-Pacific fleet around three to four years’ ago and decided to pursue opportunities in that region in the form of our Jakarta facility,” he says.
Thailand’s ‘boutique airline’, Bangkok Airways, will order 20 single aisle jet aircraft this year, airline president, Puttipong Prasattong-Osoth, told Bloomberg this week.
He said the carrier will ask for request for proposals from Airbus, Boeing and Bombardier, although the eventual order will be with a single OEM.
“The good thing is, once we change our planes to the same model, the cost of operations and maintenance will be lower,” Prasattong-Osoth said. Bangkok Airways operates a fleet of 14 A319ceo and nine A320ceo. They have near perfect commonality. The airline also has six ATR72-500s and nine ATR72-600s. Earlier this year, Bangkok Airways confirmed purchase of four more -600 turboprops to replace older versions of the type.
The Suvarnabhumi Airport-based airline flies to 30 destinations in 11 countries, including the Maldives, Hong Kong and Mumbai.
Bangkok Airways has almost been consistently profitable for the last decade and Prasattong-Osoth expects revenues in 2018 will increase 8% year-on-year, to THB28.5 billion baht, despite mounting competition and higher fuel costs.
The airline holds a 33% equity in Samui Airport. Prasattong-Osoth said the airline would like to increase that when the time and price was right. It also has major shareholdings in Sukhothai and Trat Airports.
Bangkok Aviation Fuel Services Plc (BAFS) has expressed an interest in investing in aviation fuel service at U-Tapao airport and expects to finalise its model by the end of the year.
Prakobkiat Ninnad, managing director, said the company had proposed the plan to the Eastern Economic Corridor (EEC) Committee and Royal Thai Navy which operates the airport.
The company is exploring the possibility of a role in oil depot, aviation fuel or fuel pipeline services.
Once the EEC and U-Tapao Airport have been completed, about 34 million passengers are expected at the airport annually, with the estimated number close to that at Don Mueang International Airport which uses 1,100 million litres of aviation fuel a year, Prakobkiat said.
Aside from U-Tapao Airport, BAFS is also interested in providing services at other local airports which have been upgraded by the Department of Aviation, including Krabi, Udon Thani, Nan and Phrae.
Each airport may take as long as a year for a study on a joint investment plan, Prakobkiat said.
He said the BAFS is expected to post growth in income of about 4-5 per cent this year as more airlines have received licences to operate after the International Civil Aviation Organisation (ICAO)'s removal of Thailand's red flag and the expansion in tourism. In March, 16 airlines obtained licenses and about five airlines are being considered.
BAFS reported a total income of Bt3.64 billion last year.
“The company’s income is expected to reach Bt5 billion within 2021-2022 after the oil pipeline project to the North – Phichit-Lampang route is completed in the fourth quarter of 2019 and the company can fully realise income from Fuel Pipeline Transportation (FPT) which is expecetd to rise to 30 per cent from the current 20 per cent," he said.
In the second quarter of this year, BAFS is expected to see a rise in income with the contribution from aviation fuel service increasing by 9 and 9.9 per cent year-on-year in April and May respectively due to last year's low base, no runway shutdown at Suvarnabhumi International Airport, higher number of flights. This year, BAFS has set a budget of Bt5 billion for investment, about Bt4.7 billion of which will be in oil pipeline work in the North and Bt120 million in Uniwave Co Ltd which designs, produces and assembles aviation fueling vehicle and equipment.
BAFS holds a 90 per cent stake in Uniwave.
BAFS also expects to start a joint venture with PTG Energy Plc early next year.
Initially, three petrol service stations will be set up in Phichit, Lampang and Kamphaeng Phet provinces. BAFS will hold a 40 per cent stake in the joint venture with the majority stake of 60 per cent going to PTG Energy.
The joint venture will have a registered capital of about Bt100 million.
The board of Thai Airways International Plc (THAI), the flag carrier of Thailand, has tentatively named Sumeth Damrongchaitham president two years after the retirement of its former head.
The board meeting on Saturday also assigned its remuneration subcommittee to negotiate employment conditions and salary before proposing it to the board for approval.
Mr Sumeth, 53, is a managing director of state-owned property company Dhanarak Asset Development Co, a unit of the Treasury Department. He was also chief operating officer of music and entertainment group GMM Grammy Plc.
Krittaphon C Chantalitanon, vice-president for the alliance and commercial strategy department, said the appointment of the new president should be completed this year.
He said additional negotiations and the date for the final decision will depend on the president's remuneration subcommittee, which will forward its decision for the board's approval.
"The company should have someone to take the top post and run the business," said Mr Krittaphon.
He said the airline has many strategies and business plans moving forward, including a plan to purchase 20 new aircraft. The airline is likely to purchase 10 Boeing and 10 Airbus aeroplanes.
"We are open to both [firms] as they have comparable products," he said.
Mr Sumeth's selection is the culmination of a search that began in September 2016 after Mr Charamporn retired.
Usanee Sangsingkea, vice-president of the aviation business unit, has served as acting president, while the airline has struggled to find a qualified replacement.
If Mr Sumeth is appointed, he will take control of an airline struggling for growth in an environment of high fuel costs and competition from low-cost carriers.
Thai Airways reported a 14% drop in net profit for January-March after booking a loss for 2017.
Investors and analysts said potential candidates may have been deterred by the airline's lack of independence. THAI's board is comprised of civil servants and former members of the air force.
Amnart Ngosawang, an analyst at KTB Securities Co, said as Thai tourism has continued to grow, domestic and regional airlines have expanded their networks both locally and regionally. Some full-service foreign airlines have spread their wings into Thailand, intensifying the competition.
AirAsia Group has confirmed it will invest US$150 million (4.8 billion baht) in a maintenance repair overhaul (MRO) facility at the Eastern Economic Corridor's U-tapao airport.
The facility, to be completed in one year, will serve as a maintenance centre for all 200 of AirAsia Group's aircraft in the region.
Tony Fernandes, group chief executive, said the company would make the investment after meeting with Deputy Prime Minister Somkid Jatusripitak Wednesday.
"We can immediately begin the project once the Thai government approves it," he said. "But it will still take a month to reach a final agreement with partners and about 12 months to construct the facility."
Thailand is a significant destination for AirAsia investment because of the high potential of its tourism industry.
AirAsia, Asia's largest low-cost carrier in terms of passengers carried, operates 200 aircraft in Thailand, Malaysia, Indonesia, the Philippines and India. That number is projected to grow to 300-350 in the next five years.
The MRO facility will offer services to other airlines and is forecast to attract 10-20 supporting firms to invest in Thailand.
The company is seeking parties to invest in the construction of U-tapao's 1.5-billion-baht low-cost terminal project, which will take 12-18 months to build.
"AirAsia should not invest and operate the low-cost terminal because it may affect the operations of other airlines," Mr Fernandes said.
The company asked the Thai government to reduce U-tapao's airport tax to 200-250 baht from 400, saying the lower tax will attract more visitors to Thailand.
Mr Somkid said the government will consider the airport tax cut proposal, which he said would depend on the ability of AirAsia to attract visitors to Thailand.
The firm has established Thailand as its human resources, accounting and purchasing headquarters.
U-tapao's capacity can be raised to 20-30 million passengers (equal to that of Don Mueang airport) in the next five years, once a high-speed railway links all three airports.
The company's two aircraft at U-tapao service nine routes. AirAsia plans to add two aircraft a year to its U-tapao fleet and expects to add 400 aircraft by 2025.
"By that time, the company will operate long-haul routes from Korea, Japan, China, Australia and Europe," Mr Fernandes said.
A PLAN by Thai Airways International (THAI) for a showpiece aircraft maintenance centre in the Eastern Economic Corridor (EEC) – intended to cement the country’s status as a regional aviation hub – is edging closer to reality, with a feasibility study due to be completed this month.
The project for the aircraft maintenance, repair and overhaul (MRO) centre at U-Tapao International Airport is being led by the national carrier, which will operate the facility in a joint venture with a yet-to-be selected aircraft manufacturer.
Planned to open in 2022, the so-called MRO Campus is billed as a world-class facility that will further entrench Thailand’s standing as an aviation hub in the region and help propel the development of the flagship economic zone that hosts it.
Ronnachai Wongchaoum, vice president of the TG MRO Campus Project Office Department at Thai Airways International Plc (THAI), said the airline expected to submit the feasibility study for the project to Prime Minister Prayut Chan-o-cha by this month or the next. Prayut, who chairs the Eastern Economic Corridor Management Committee, would decide whether to approve the project in principle.
“We want to develop the No 1, world-class MRO centre, which will be the best in terms of on-time and on cost considerations, as well as on quality,” Ronnachai said.
Occupying a 210-rai plot, the MRO Campus will require investment of about Bt11 billion, with Bt7 billion earmarked for construction and the rest for equipment. The design work is scheduled to start from June and will take about one year, before construction can begin.
The MRO Campus will be owned and invested in by the Royal Thai Navy under a right granted by the Treasury Department. The campus will be operated by THAI and the joint venture partner under a leasing contract of 50 years.
The MRO Campus will open officially in June or July 2022, and employ between 500 and 800 workers, including technicians. The maintenance centre will have a capacity to handle between 50 and 80 heavy maintenance events annually.
The centre’s payback period will be between five and 10 years when annual income is forecast to reach Bt3 billion. The MRO Campus’ annual income from aircraft maintenance services is expected to exceed Bt22 billion within the next 50 years. U-Tapao airport itself is expected to attract an increasing number of visitors, jumping from around 30 million a year now to 60 million in the next five years.
“We (THAI) have already approached the biggest of the two major aircraft manufacturers to become our joint venture partner in the MRO Campus project in U-Tapao,” Ronnachai said.
“We have got a positive response from a European company that is looking for a prime location in Southeast Asia to set up a maintenance, repair and overhaul centre. For us, we would like to have technology transfers and customers from the aircraft maker.”
“We need to find an aircraft manufacturer as our joint venture partner so as to benefit from the transfer of maintenance technology and management know-how.”
Ronnachai said the envisaged 50:50 joint venture agreement between THAI and the plane maker that will emerge as its partner in the MRO Campus project is expected to be signed by the end of this year.
He said that the aircraft maintenance business in the Asia-Pacific region shows strong growth potential, driven by an increasing number of aircraft in the region, including those being operated by the major airlines.
There are about 20,000 aircraft in operation globally and the number will increase to 35,000 within the next 20 years, according to predictions from the big major aircraft manufacturers.
“There are also 6,139 aircraft being operated in the Asia Pacific, including China. In the next 20 years, 14,276 new aircraft will be added into the region,” Ronnachai said.
“Meanwhile, about 3,438 existing aircraft will be discharged from the Asia Pacific region in the next 20 years. As a result, the actual number of aircraft operated in the region, including China, will be 16,977 in the next 20 years.”Ronnachai said that each aircraft will have a lifetime of between 24 and 30 years on average, and are typically operated by premium airlines for the first 12 years before they are sold to other airlines or air service providers. Each aircraft will see about four to six years of operations before entering major maintenance. Each round of such maintenance would cost about Bt25 million, Ronnachai said.
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