[ Thailand ] Ready for take-off: U-tapao airport is to receive a $5.7 billion upgrade.

03 January 2018

Despite the strong foundation of its well-established automotive industry, Thailand still requires decades of investment in personnel, expertise and research and development (R&D) before the country can properly enter the race to become an aviation hub in Asean.

Prime Minister Prayut Chan-o-cha last week declared that Thailand is ramping up its aviation industry in bid to become a regional powerhouse, but experts have long commented that there is still a lot to be done before the country can wrest the crown from Singapore.

Gen Prayut made these comments while chairing the opening ceremony of the Global Aviation Security Plan, a meeting aimed at enhancing the effectiveness of aviation security co-hosted by the International Civil Aviation Organisation (ICAO) in Bangkok.

"Thailand is a dream station for the automobile industry but even with this capability, the hurdle is still very high," Hiroshi Horiguchi, managing director of IHI Asia Pacific (Thailand) told the Bangkok Post when asked about the possibility.

IHI Corporation is one of the key players in the global automotive gasoline engine turbocharger market and is Japan's leading maker of jet engines, with a market share of between 60% and 70%.

"Everything is still controlled by the US and Europe, so there is a need to incorporate with American and European giants to further develop the country's manufacturing capability … Thailand also needs more know-how and it will take a long time, maybe more than 10 years, and huge investment to transfer and internally develop such capability," Mr Horiguchi said.

The government intends to upgrade Thai civil aviation to be on par with international standards after the ICAO decided to lift the red flag which was imposed in June 2015 over its failure to address safety shortcomings. It is also planning to revamp U-tapao International Airport as part of the plan to invest 1.5 trillion baht (US$44 billion) between 2017 and 2021 to further develop the Eastern Economic Corridor.

The $5.7 billion upgrade to the Vietnam War-era airport has already attracted the likes of Airbus and Lockheed. France's Airbus in March signed a memorandum of understanding with Thai Airways International to evaluate the development of a major new maintenance, repair and operations (MRO) facility at U-tapao. Lockheed Martin's Sikorsky Aircraft is the latest manufacturer to study a possible increase in MRO spend in Thailand as revealed by the Thai Board of Investment in May.

Thailand's central geographical location makes it highly suitable as an MRO hub while the deep-sea port in Laem Chabang can accommodate transport critical for very large aircraft components. The ambitious plan for a new rail system to link Suvarnabhumi, Don Mueang and U-tapao airports will improve flexibility and logistical speed for MRO facilities.

On top of that, the Thailand 4.0 strategy has also set up tax incentives and simplified requirements for residence permits and land ownership, as well as "free zones" where materials and goods can be stored and re-exported without taxation or tariffs to attract investors.

"This exciting new project will help to meet strong demand for maintenance services in the fast-growing Asia-Pacific region," said Airbus Commercial Aircraft president Fabrice Bregier in May. "With the fleet in the region set to almost triple to over 15,000 aircraft over the next 20 years, this project represents a sound opportunity for Thailand to develop its footprint in the aerospace sector.''

With Thailand having addressed all issues relating to aviation safety raised by the ICAO, a forward-looking plan of more than 10 years is already in place via the 20-year Thailand 4.0 policy and the development of the EEC. The Airbus agreement is a positive start, but the country still needs to attract more such deals.

Attracting large aircraft manufacturers to encourage the transfer of know-how and letting the supply chain grow from there is the way go but that still requires a lot of patience, Mr Horiguchi revealed.

"It will take a long time and it will not be easy because acquiring such technology is financially painstaking and time-consuming due to the shared development cost.

Gradually, gradually and gradually, we expand to the point where we can get the technology and the manufacturing capability, but it takes a huge investment.

Maintenance operations are actually even more difficult [to set up]," he said.

ICAO regional director for Asia and the Pacific office, Arun Mishra, said last week that Thailand's ambitious goal to become an aviation hub is possible but there are two strategic areas that the country needs to improve first: infrastructure and airport facilities, and manpower where more young professionals in related fields must be recruited.

Mr Mishra's opinion is a point of view that has long been shared by Hugh Vanijprabha, managing director of Rolls-Royce (Thailand).

"The industry is not new to Thailand; the country is already mature in certain areas while there is room to grow in others," Mr Vanijprabha said.

"But to take advantage of these opportunities, there are gaps we need to close first. In particular we need to increase capacity through airport expansion and improvement in the way we manage airline traffic across the country. This will allow us to more effectively manage the expected growth in aircraft traffic and become a hub for Southeast Asia."

Mr Vanijprabha said the MRO market is very competitive and Singapore's hub already houses over 100 aerospace companies, so Thailand must differentiate itself by focusing on specific segments. These focus areas should take into account the large domestic fleet as well as regional market opportunities.

"The key to unlocking the country's potential to be an aerospace hub is the capability of our workforce. Strong English and communication skills, advanced science and technology-focused education, high vocational skills developed through apprenticeships as well as education and industry collaboration, research and innovation in materials and manufacturing technologies are necessary in order to help solve industry challenges," he said.

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Credit: Bangkok Post
Credit link: https://www.bangkokpost.com/news/transport/1384638/aviation-hub-potential-exists-but-work-must-be-done

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