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Thai Airways will spend Bt35 billion on 15 new aircraft by 2014

Thai Airways International’s plan to acquire 15 new aircraft by 2014 for Bt35.5 billion was approved by its board yesterday, in recognition of stricter emissions requirements in the near future. Seven 300-seat aircraft will be acquired through a Bt31.3 billion financial lease for regional routes, while eight 350-seat aircraft for long-haul routes will be acquired via operating leases running 10-15 years, chairman Ampon Kittiampon said.

Aishwarya Gupta

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Thai Airways International’s plan to acquire 15 new aircraft by 2014 for Bt35.5 billion was approved by its board yesterday, in recognition of stricter emissions requirements in the near future.

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Seven 300-seat aircraft will be acquired through a Bt31.3 billion financial lease for regional routes, while eight 350-seat aircraft for long-haul routes will be acquired via operating leases running 10-15 years, chairman Ampon Kittiampon said.

A budget of Bt922 million was also set aside for two engines for the regional aircraft, and another one of Bt3.3 billion for three engines for international routes.

These 15 aircraft will join five A330-300 aircraft that have already been ordered and will be put in service this year and six A380 aircraft that will enter the fleet from 2012-2013.

President Piyasvasti Amranand said the new aircraft’s influence would not show up in this year’s performance but would be significant in the long term.

The procurement would be as transparent as possible, to keep intervention at bay, he said.

“Our focus will be on further reducing non-fuel expenses by Bt12 billion this year (from Bt10.8 billion last year), and how to make the airline profitable in 2010 as scheduled,” he said.

These energy-efficient aircraft will help the flag carrier meet the European Union’s stricter greenhouse gas emission restrictions, he said.

In 2012, airlines flying into the EU will face emissions quotas in the EU’s attempt to fight climate change.

THAI now operates 91 planes – 47 Boeings, 42 Airbus’ and two ATRs – with a reported average age of 11.6 years, versus six years for a regional leader like Singapore Airlines.

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THAI spends Bt35.5 bn on new aircraft

Infrastructure services, if quickly improved, could promote a better investment climate in Thailand. Logistic costs, for example, are reported by firms to be higher for them in 2007 compared to 2004. This is particularly true for industries that are located in regions other than Bangkok and vicinity or the East where the major markets and ports are located. They include the food processing and furniture industries. A partial explanation for the higher logistic cost was the sharp rise in diesel prices from 2004 to 2007. However, another important explanation is the increased congestion of roads and ports which added to the transport time and costs. The quality of public utility services (electricity, water, and telephone) have also declined from 2004 to 2007 as the period of service interruptions have risen. This is a reflection of the inadequacy of infrastructure services as demand from businesses have increased rapidly over the years. These service interruptions are costly for firms and will hurt Thailand’s competitiveness as other countries in the region such as China and Vietnam are quickly improving them.

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These include both universal tariff reductions, which are applicable to goods from all countries, and specific tariff reductions that result from free trade agreements (FTAs) with other countries and regions. For example, since June 2008, a wide range of agricultural and manufactured products from ASEAN member countries, China, India, and New Zealand enjoy lower or no tariffs. Among others, they are butter, vegetable extracts and fats, pharmaceutical products, paper and tubes for a medical use, pumps for liquid, air and vacuum pumps, commercial trucks, steel tubes, iron wires, aluminum structures, dish washing machines, weighting machines, and switching circuits and boards parts. In addition, the government will also cut or cancel tariffs for three types of animal feeds (soybean, corn, and fish meals) in 2009. The magnitude of changes varies across different trade agreements, such as those with the WTO, ASEAN, ACMECS28, Japan, Australia, and New Zealand.

A clear policy framework is needed, and the development direction set forth by the policy makers should be based on reliable information on the current status of infrastructure development. Systematic, periodic, and internationally-standard information collection within the infrastructure sector will provide Thai policy makers with good background with which to assess the current situation, identify bottlenecks, set clear policy direction, and prioritize projects more effectively .

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