Friday, Jun 22, 2018
Transport | Asia-Pacific | Thailand

Thailand’s aviation industry

Thailand aims to become aviation hub for high-flying Asia-Pacific region


3 months ago

Mrs. Usanee Sangsingkeo, Acting President of Thai Airways
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Mrs. Usanee Sangsingkeo

Acting President of Thai Airways

Mrs. Usanee Sangsingkeo, Acting President of Thai Airways, discusses the phenomenal growth of the Asia-Pacific region and how Thailand can act as a major aviation hub for the region. She also speaks about the nation’s tourism strategy and how Thai Airways plays an important role in promoting Thailand as a first-class tourism and business destination

 

Rapid economic growth in the ASEAN region has been driving a surge in demand for air travel for the past two decades. Air-traffic has been steadily growing and passenger traffic is expected to triple in the Asia-Pacific region over the next two decades. How do you asses the regions potential in the aviation sector?

We see tremendous growth potential in Asia Pacific. The Asia-Pacific region is now the world’s single largest aviation market as well as a growing economic powerhouse, making it crucial for airlines to be a part of this market for increased growth. Growing purchasing power in emerging economy markets, increased air connectivity, more affordable travel and a relaxation of visa requirements continue to fuel tourism demand from within and outside the region.

 

We are seeing how government agencies, investment organizations and industry power players in Thailand are pooling their resources together through public and private partnerships to create Asia’s next major aviation hub. Is Thailand in position to become a full-service aerospace-hub?

Thailand aims to establish an aviation centre in the near future in order to cater to the expected growth in the tourism sector. The U-Tapao International Airport Development Project is one of several important development projects in the Eastern Economic Corridor (EEC). There will be more than the current 34-35 million visitors to Thailand each year and we believe that building the aviation hub at U-Tapao is beneficial. The project would offer attractive business opportunities for aviation partner companies and suppliers. 

As 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. Plans are also underway to revamp U-Tapao International Airport as part of the plan to develop the Eastern Economic Corridor. 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.

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. But to take advantage of these opportunities, 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.

 

How do you asses the performance of the aviation industry in Thailand? What would you point out as Thailand’s greatest strengths?

Thailand enjoys a strategic location and serves as a gateway into the heart of Asia – home to what is today the largest growing economic market. This has gained a well-deserved reputation throughout the world for its gracious hospitality.

Bangkok remains the most visited destination in Asia-Pacific. Inbound tourism to continue to expand due to various factors including the country’s “tourism-friendly environment,” and proactive marketing plans of government agencies.

This year is Amazing Thailand Tourism Year 2018, and the goal is to bring in more quality tourists and maintain the country’s traditional tourism markets. It is also intended to create higher economic value and distribute tourism income to the regional areas of the country. It will also follow the development agenda of Thailand 4.0, based on the Sufficiency Economy Philosophy, as well as Inclusive Tourism that maintains a balance between the economy, society, and the environment.

To boost the region’s tourism industry, THAI works with the local travel related stakeholders such as the Tourism Authority of Thailand, Nok Air, Bangkok Airways, Thai Smile and Thai Air Asia to study ways to open more direct flights in the region.  Stakeholder involvement is the key to successful collaboration as industry help reshape the Thai travel industry for positive growth and development.

The Thai aviation industry’s outlook improved after the ICAO’s red-flag removal, which could foster the Thai aviation industry to grow more. The outlook for air travel markets this year remains broadly positive, although an earlier boost in demand spurred by falling oil prices is now behind us, with growth rates potentially moderating.

Aside from automatic check-in kiosk, flight re-booking and document check, we’re excited about our continually improving relationship with airport and travel industries stakeholders, because we cannot make the large-scale, airport-wide changes that we need to without collaboration with all of our strategic partners. We want to encourage the widespread adoption of technology to improve the passenger experience and optimize operations.

 

How would you describe Thai Airways role as a strategically important national infrastructure asset?

Thailand's economic policy, which focuses on high-tech manufacturing and expansion of trade, combined with increased foreign capital inflows, will support accelerated growth in air services. 

THAI as the national carrier operates under the government policy and being a part of the tourism industry to meet the country’s long-term strategic development plan in order to transform Thailand’s economic structure to “Thailand 4.0”. This is focusing on becoming a value-based and innovation-driven economy by moving producing commodities to innovative products, emphasizing on promoting technology, creativity, and innovation in focus industries and from a production-based to a service-based economy.

The Eastern Economic Corridor (EEC) development project and airport upgrades are partially a major investment in infrastructure as the part of the government’s efforts to make Thailand one of the most preferred investment destination in Asia. Again the area around U-Tapao Airport is to be developed into a special aviation zone as part of a drive to open up Thailand as a regional aviation hub. The zone will benefit from a special investment promotion to woo aviation companies to Thailand. The Government plans to connect the three international airports, Don Mueang, Suvarnabhumi and U-Tapao, with a high-speed train system.

A new terminal will also be opened to enable the airport to increase passenger numbers from 3 million to 15 million. This expansion is only the first of several stages. After reaching a 15 million passenger threshold under the first phase, the second phase will seek to further expand the passenger throughput to 30 million. The third stage aims to double that again to 60 million passengers by 2038.

 

In terms of fleet modernization, what efforts are being done by Thai Airways to remain highly competitive?

The fleet of aircraft is the main company asset that generates revenue for THAI. The longer the aircraft utilization, the higher aircraft maintenance costs will be.  It's necessary to maintain regular maintenance for old aircraft that cannot be fully utilized.  Meanwhile, new aircraft technology and innovation makes newly manufactured aircraft considerably safer and better engine management helps to minimize a company’s operating costs.   While commercial airline competition remains high, the trend is that there is a likelihood that the passenger fare index will remain steady or be lower. While airlines are unable to increase passengers’ air fare, it is necessary to compete with lower operating costs.  Therefore, in order for the company to effectively compete with other airlines, the company must acquire new aircraft types for its fleet in an effort to reduce operating costs.

 

How is Thai Airways redefining the customer relationship and creating a world-class experience?

To redefine customer relationships, THAI places great emphasis on customer service at every touch point and the connection between airlines and customers in the current global rise in digital technologies. For the millennial customer, the trend involves an increasing use of online channels and social media, for example email, Facebook, and Instagram, etc.

Hence, THAI is undertaking a massive program that involves use of big data technology which could lead to expanding our loyal customer volume. Initially, we have integrated the system to all customer contact points within the service ring, in order to synchronize useful data and deliver a great travel experience to customers.  In addition, we ensure that THAI strictly complies with all mandatory regulations in order to ensure flight safety and security.

 

As the countries flagship carrier, what is Thai Airways role when it comes to promoting Thailand to an international audience as a tourism and business destination? 

To establish Thailand as Asia’s business destination, THAI also supports the government agencies, such as TCEB (Thailand Convention & Exhibition Bureau) and MICE (Meetings, Incentive Travel, Conventions and Exhibitions) to drive arrivals from all agencies that plan various business events and attract growing numbers of international visitors to Thailand. In 2018, we have projects to support trade shows and road shows in China, U.S.A., India, Australia and Germany. Some promotional special fares are offered plus some rewards such as complimentary tickets for familiarization trips.

Furthermore, THAI has continually organized our own booths at the World’s Leading Travel Trade Shows, such as ITB Berlin and WTM (World Travel Market) in London. Those marketing activities abroad are good opportunities to attract millions of international travellers who are interested in visiting Thailand both for leisure and business. As a result of promotional activities overseas, our revenues increase and the activities create brand awareness for Thai Airways International as Thailand’s national flag carrier. Those are parts of THAI’s efforts to promote Thailand to all international audiences as a tourism and business destination.

 

Japan is one of Thailand’s top 5 source of tourist arrivals with 1.5 million arrivals in 2017. How significant is the Japanese market to Thai Airways? How would you define the relationship within this market?

Since the inaugural fight between Thailand and Japan was implemented in 1960, THAI now has 57 years of experience operating flights to Japan. Over time, Japan has become one of THAI’s most important markets. We have been gradually penetrating into the market as a foreign carrier in Japan that transports passengers between the two countries. THAI has been a major contributor to bring Japanese visitors to Thailand as well as Thai visitors to Japan.

There are many Japanese companies that have business establishments in Thailand and have a market presence across the country. Some famous companies such as Toyota have become quite popular in the Thai market and prove to be one of the most important power houses for the Thai economy together with its automobile-related affiliate companies.

As the major contributor of transportation between Thailand and Japan, THAI has also established a strong brand with the Japanese business sector in various industries.

As incremental flights between Thailand and Japan will continue to grow, together with expected improvement of economic conditions, we are certain that business opportunities for Japanese companies will also continue to grow higher for many years to come.

 


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