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13 Mar 2017

Industry

Solutions to ICAO/FAA Problems Key to Regional Hub Goal (Current Issue No. 2830 Full Ed.)

 A good sign is seen in the Civil Aviation Authority of Thailand (CAAT) having issued its first air operator certificate (AOC) to a commercial airline on February 27, 2017. This marks significant progress, given that Thai aviation has been threatened by safety standard issues since mid-2015. In an attempt to rectify the situation, the government has taken actions that should be helpful. CAAT expects that by this June, it will be able to issue certifications to all nine of Thailand's major airlines, whose combined passengers accounting for 75 percent of the total passenger. Later, it will invite representatives of International Civil Aviation Organization (ICAO) for inspection, which could lead to the lifting of a red flag on Thailand's civil aviation business. On account of this, KResearch believes that Thai aviation may finally negate prior ICAO and FAA (US Federal Aviation Administration) warnings by the latter half of this year, if the planned re-certifications are completed by June.

By surmounting this setback, Thai airlines would be entitled to expand their routes and fully exploit new marketing strategies. Certain airlines, having held off on plans to extend routes to Japan and South Korea, would then be able to proceed. Some would also resume flights to the US. Given this, we foresee a gradual increase in airline business for Thailand this year, over and above the current uptrend. This rosy outlook should continue well into 2018 when more robust growth is anticipated. If the above-stated hindrances are successfully removed, KResearch projects that Thailand's airline business could reach a value of THB288.7 billion in 2017, with a possibility to reach THB306.4 billion in 2018. Otherwise, the value will likely be around THB286.2 billion and 294.5 billion in 2017 and 2018, respectively.

The improvements in Thailand aviation safety standards needed to restore confidence in our aviation industry will be essential for us to achieve our target of becoming a regional aviation hub. Ready and equipped with the infrastructure and an extensive route network connecting every country in Southeast Asia, Thailand's strength in aviation business is obvious, making the goal realistic. If we achieve that, it will benefit the whole industry, especially businesses involved in aircraft maintenance, repair and overhaul (MRO). This corresponds with the government's naming of the aviation industry as a target industry for the Eastern Economic Corridor (EEC), hoping to make Thailand a regional MRO hub in the future.

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