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Thailand to remedy aviation sector’s regulatory shortcomings

Increased investment in human resources and more stringent regulatory oversight are part of a wider programme aimed at bringing Thailand’s aviation sector back in line with international standards.

Oxford Business Group

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Increased investment in human resources and more stringent regulatory oversight are part of a wider programme aimed at bringing Thailand’s aviation sector back in line with international standards.

In particular, the government and industry officials will be looking for improved safety measures to help Thailand lift operational restrictions imposed last summer.

Safety downgrade

In June of last year, following a preliminary 90-day warning, the International Civil Aviation Organisation (ICAO) – the UN agency responsible for the industry’s technical rules and regulations – lowered its safety rating for Thailand’s Department of Civil Aviation (DCA) from Category 1 to Category 2.

The agency had repeatedly warned Thai authorities that shortages in trained and experienced DCA staff were undermining the local regulator’s capacity to supervise airline operators and operations.

When the probationary period ended, the ICAO red-flagged the country, banning Thai carriers from opening new flights or charter services to China, South Korea and Japan, and effectively slowing the rollout of the new low-cost airline NokScoot. Although the carrier, which is a joint venture between Thailand’s Nok Air and Singapore’s Scoot, inaugurated services in May 2015, the ban on opening new routes has impacted its expansion plans.

The US Federal Aviation Administration (FAA) followed suit in early December, lowering its own International Aviation Safety Assessment rating for Thai carriers to Category 2, citing similar shortcomings in legal and regulatory oversight.

As with the ICAO action, under the revised FAA rating Thai carriers will be permitted to continue operating existing routes to the US but will not be approved for new services.For its part, the European Aviation Safety Agency (EASA) decided not to impose any sanctions on the industry or its regulators last year. The agency did, however, warn that significant reforms would be required before its next audit later this year.

Impact on tourism

The results of the upcoming EASA audit could be significant for Thailand’s tourism-dependent economy, which relies heavily on the aviation sector.

According to data issued by the International Air Transport Association (IATA) in mid-February, aviation and related activities account for some 2m jobs in Thailand and contribute about $29bn per year to GDP.

These figures could virtually double by 2035, the IATA noted, to 3.8m jobs and $53bn in GDP contributions, though this growth is contingent on industry reforms and a return to Category 1 status.

Reaching these target levels may require regulatory tightening in other areas of the industry that have seen instability in recent months.Budget carrier Nok Air was forced to cancel nine flights in a single day in February due to a pilot strike, leaving some 1400 passengers stranded.

The cancellations prompted an immediate response from authorities, with the Ministry of Transport setting a one-month deadline for airlines to issue emergency and risk-management plans.Failure to deal with disruptions and instances of repeated flight cancellations could lead to termination of an airline’s licence, Ormsin Chivapruck, deputy minister of transport, warned in mid-February.

Oxford Business GroupSource: Thailand to remedy aviation sector’s regulatory shortcomings | Thailand 2016 | Oxford Business Group

With some of the industry’s most experienced analysts conducting on-the-ground research throughout the year, OBG provides its global readership with the business intelligence they need to stay ahead.

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