Thai air traffic takes off again

Thomas Hundt

Air traffic in Thailand accelerated strongly in the past 10 years. From 2009 to 2019, the number of passengers increased from 58 million to 165 million, and aircraft movements increased from 0.42 million to 1.07 million.

The Covid-19 pandemic is now keeping large parts of the domestic aircraft fleets on the ground. The airlines had to largely cease operations from the end of March 2020. Aircraft movements dropped to around one-tenth of the 2019 level in April-June 2020.

Domestic air traffic is recovering

Domestic flights increased from April to July 2020 from 2,031 to 25,701 flights per month. The airlines want to reactivate more routes this summer because Thais are now travelling more to domestic destinations. However, reaching the monthly average of 46,156 domestic flights in 2019 is still a long way off.

Restrictions on international air travel and entry will affect the international airline business for even longer. International flights remained at around 3,000 to 3,500 flight movements per month from April to July 2020.

The highly indebted Thai Airways company applied for protected bankruptcy proceedings at the end of May 2020 and is negotiating with creditors with regard to restructuring and reorganisation. The national airline’s 75 aircraft are currently on the ground. The other major airlines, Thai AirAsia (62 aircraft) and Bangkok Airways (40 aircraft), have restarted part of their flight operations.

Airports were too small in 2019 and prepare for a recovery

Thailand has 38 airports. The Ministry of Transport’s Department of Airports manages 28 mostly smaller civil airports. Bangkok Airways owns three tourist airports. The public company Airports of Thailand (AOT) operates the six larger airports in the country. The larger ones worked beyond their capacity limits in 2019 and should therefore be expanded.

The country’s most important aviation project is to be implemented at U-Tapao Airport.

The Royal Thai Navy owns U-Tapao International Airport, which is 150 kilometres south of Bangkok. Thai Airways has set up its aircraft maintenance centre there. In June 2020 the Royal Thai Navy and the planning authority, Eastern Economic Corridor Office of Thailand, signed a

contract for a US$ 9 billion expansion of U-Tapao Airport with Sino-Thai Engineering and Construction, Bangkok Airways and Thai BTS Group. The contract for the publicprivate partnership covers the construction and operation of commercial buildings, a new terminal, an aviation training and air cargo centre and an aircraft maintenance centre (maintenance, repair and overhaul – MRO).

Covid-19 dampening new projects

The European aircraft manufacturer, Airbus, however, has not signed a planned joint venture contract with Thai Airways to operate the MRO centre at U-Tapao. The Eastern Economic Corridor Office is now looking for new partners for the maintenance centre.

At the end of 2019 a total of 245 private and 370 commercial aircraft were registered with the Civil Aviation Authority of Thailand (CAAT). Of the commercial aircraft, 44 per cent were Airbus models, 31 per cent Boeing types, 4 per cent ATR series and the remaining 21 per cent were from other manufacturers.

In 2018 the market experts at Frost & Sullivan forecasted that the number of commercial aircraft in Thailand would grow to 811 units by 2037 and that the demand for MRO services would triple to almost US$ 3 billion. Due to the aviation crisis, however, these forecasts are to be reached much later.

Aircraft must be properly maintained and, if necessary, repaired. Singapore is the hub and most important provider of maintenance and repair services in Southeast Asia. Thailand wants to catch up. The Government adopted the Thailand 4.0 industrial policy in 2017. The strategy paper emphasises the domestic opportunities in aviation and the MRO market.

A new generation of skilled workers is already being provided. The Civil Aviation Training Centre in Bangkok, together with other organisations, takes care of professional MRO training. Several Thai universities offer special courses in aircraft maintenance. The CAAT has licensed 15 organisations for training pilots. The state-owned company AEROTHAI, which is part of the Ministry of Transport, is responsible for air traffic control and the training of air traffic controllers.

Aviation industry is already settling here

The Thailand Board of Investment (BOI) supports investors in the aviation industry and offers an eight-year exemption from corporate tax and import duties as well as other privileges.

Domestic companies perform approximately half of the MRO service work, and more are being added. The US company TurbineAero opened an MRO plant in October 2019 at which Auxiliary Power Units are maintained and repaired. In February 2019, the French subsidiary of Revima laid the foundation stone for a landing gear MRO facility. The opening was planned for summer 2020.

Several companies in Thailand also supply the international aircraft industry. Triumph Structures and Omada International in Rayong Province produce composite parts as well as metal and titanium components for Boeing models 737, 777 and 787. Triumph Aviation Services Asia supplies composite parts to Airbus for itsA350 series. Senior Aerospace produces aerofoils for engines and other components of the aviation industry. Michelin Siam manufactures aircraft tyres. The company Safran Cabin assembles transport containers. And the factory of the German company Leistritz in Chonburi Province produces components for aircraft turbines.

Contact details: Thomas Hundt Director Thailand, Cambodia, Myanmar, Laos GERMANY TRADE & INVEST www.gtai.com