Airlines in Thailand increase capacity and improve standards

 

Success has come at a price for Thailand’s tourism industry. With total visitor numbers increasing very rapidly and for many years, infrastructure is under strain. According to the World Bank, bottlenecks are starting to develop in places such as Bangkok, Chiang Mai and Phuket. The situation at the country’s airports is particularly challenging. Airports of Thailand told local media in June 2016 that it will spend $5.5bn over the next 15 years to upgrade its facilities.

Near Crisis

The airport situation has become critical in recent years. The International Civil Aviation Organisation (ICAO) and the US’s Federal Aviation Administration (FAA) downgraded Thailand in 2015, with the US regulator taking the country from Category I to Category II. The FAA placed three restrictions on Thai carriers for routes to the US. They currently cannot open new routes to the US, increase the frequency of existing routes or change aircraft used on routes they already have. One of the reasons the ICAO red flagged Thailand in 2015 was the local industry’s lower standards for granting air operator certificates.

In early 2016 the International Airport Transport Association (IATA) also expressed its own concerns. It said that Suvarnabhumi Airport had become a safety risk due to overcrowding. The facility has the capacity for 45m passengers per year, but currently hosts more than 52m, according to the association. The IATA was also concerned about soft spots on the runway, which can lead to aircraft getting stuck on the tarmac. The association recommended that Thailand require all airlines registered within the country undergo and pass the IATA Operational Safety Audit. Currently, only some airlines within Thailand do this, and on a voluntary basis. The IATA has also recommended that the authorities deal with the soft spots on the runway and fast track airport expansion. The downgrades have started to impact the country’s reputation and international standing. While Indonesia regained its Category I FAA rating in early 2016 after being downgraded, Thailand remains at Category II and it is the only country in the region that has this rating from the FAA. Thailand is also the only country in ASEAN to have been red flagged by the ICAO, as the Philippines was upgraded in 2015. Other countries that have been red flagged include Angola, Djibouti and Nepal.

Back On Track

However, airlines are being re-certified by the Civil Aviation Authority of Thailand (CAAT) as part of an overhaul strategy to get Thailand back on the right lists. Bangkok Airways and Thai AirAsia were the first through the process, but more than 20 still have to undergo the checks. The goal is to have reached completion by June 20, 2017.

A new civil aviation bill is also expected to be passed soon, after which the CAAT will request that the ICAO re-audit the country’s aviation sector. The bill is considered vital to reform. The ICAO has already raised 33 points about the bill and its suggestions are being incorporated. The plan is to take Don Mueang International Airport and Suvarnabhumi Airport through the Universal Security Audit Programme in July 2017. Additional capacity has also become available. In August 2016 a new terminal was opened at U-Tapao International Airport, 173 km from Bangkok and 40 km from Pattaya. The airport handles around 800,000 passengers a year, with most of them coming from China and Russia.

Upgrades & Shutdowns

In March 2017 Nok Air said it would inject BT1.5bn ($42.3m) of capital after losses of BT3.3bn ($93m) in 2016. Thai Airways, which holds a stake in Nok Air, told local press that it was looking at ways to increase links between Nok Air and its subsidiary Thai Smile Airways. Nok Air is looking to cut costs and focus more on long-haul flights to China. It is planning six new routes in 2017: PhuketChengdu; Phuket-Nanjing; Phuket-Wuhan; Bangkok/ Don Mueang-Nanning; Bangkok/Don Mueang-Linyi; and Chiang Mai-Nanjing. Another domestic firm, Kan Air, suspended its services in April 2017 due to problems with its fleet, but did not shut down operations totally.

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The Report: Thailand 2017

Tourism chapter from The Report: Thailand 2017

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