THAI bets big on maintenance hub

[webfact]

THAI bets big on maintenance hub

By JINTANA PANYAARVUDH 
KWANCHAI RUNGFAPAISARN 
THE NATION

 

Ronnachai Wongchaoum, vice president of the TG MRO Campus Project Office Department at Thai Airways International Plc (THAI)

 

A PLAN by Thai Airways International (THAI) for a showpiece aircraft maintenance centre in the Eastern Economic Corridor (EEC) – intended to cement the country’s status as a regional aviation hub – is edging closer to reality, with a feasibility study due to be completed this month.
 

The project for the aircraft maintenance, repair and overhaul (MRO) centre at U-Tapao International Airport is being led by the national carrier, which will operate the facility in a joint venture with a yet-to-be selected aircraft manufacturer.

 

Planned to open in 2022, the so-called MRO Campus is billed as a world-class facility that will further entrench Thailand’s standing as an aviation hub in the region and help propel the development of the flagship economic zone that hosts it.

 

 

Ronnachai Wongchaoum, vice president of the TG MRO Campus Project Office Department at Thai Airways International Plc (THAI), said the airline expected to submit the feasibility study for the project to Prime Minister Prayut Chan-o-cha by this month or the next. Prayut, who chairs the Eastern Economic Corridor Management Committee, would decide whether to approve the project in principle.

 

 “We want to develop the No 1, world-class MRO centre, which will be the best in terms of on-time and on cost considerations, as well as on quality,” Ronnachai said.

 

Occupying a 210-rai plot, the MRO Campus will require investment of about Bt11 billion, with Bt7 billion earmarked for construction and the rest for equipment. The design work is scheduled to start from June and will take about one year, before construction can begin.

 

The MRO Campus will be owned and invested in by the Royal Thai Navy under a right granted by the Treasury Department. The campus will be operated by THAI and the joint venture partner under a leasing contract of 50 years.

 

The MRO Campus will open officially in June or July 2022, and employ between 500 and 800 workers, including technicians. The maintenance centre will have a capacity to handle between 50 and 80 heavy maintenance events annually.

 

The centre’s payback period will be between five and 10 years when annual income is forecast to reach Bt3 billion. The MRO Campus’ annual income from aircraft maintenance services is expected to exceed Bt22 billion within the next 50 years. U-Tapao airport itself is expected to attract an increasing number of visitors, jumping from around 30 million a year now to 60 million in the next five years.

 

“We (THAI) have already approached the biggest of the two major aircraft manufacturers to become our joint venture partner in the MRO Campus project in U-Tapao,” Ronnachai said.

 

“We have got a positive response from a European company that is looking for a prime location in Southeast Asia to set up a maintenance, repair and overhaul centre. For us, we would like to have technology transfers and customers from the aircraft maker.”

 

“We need to find an aircraft manufacturer as our joint venture partner so as to benefit from the transfer of maintenance technology and management know-how.”

 

Ronnachai said the envisaged 50:50 joint venture agreement between THAI and the plane maker that will emerge as its partner in the MRO Campus project is expected to be signed by the end of this year.

 

He said that the aircraft maintenance business in the Asia-Pacific region shows strong growth potential, driven by an increasing number of aircraft in the region, including those being operated by the major airlines. 

 

There are about 20,000 aircraft in operation globally and the number will increase to 35,000 within the next 20 years, according to predictions from the big major aircraft manufacturers.

 

“There are also 6,139 aircraft being operated in the Asia Pacific, including China. In the next 20 years, 14,276 new aircraft will be added into the region,” Ronnachai said.

 

“Meanwhile, about 3,438 existing aircraft will be discharged from the Asia Pacific region in the next 20 years. As a result, the actual number of aircraft operated in the region, including China, will be 16,977 in the next 20 years.”

 

Ronnachai said that each aircraft will have a lifetime of between 24 and 30 years on average, and are typically operated by premium airlines for the first 12 years before they are sold to other airlines or air service providers. Each aircraft will see about four to six years of operations before entering major maintenance. Each round of such maintenance would cost about Bt25 million, Ronnachai said.

 

Source: http://www.nationmultimedia.com/detail/business/30345555

 

-- © Copyright The Nation 2018-05-17

[blackcab]

I would be asking for massive bank guarantees just in case a future government cancels the contract.

 

Kind of like the gold mine.

[Thian]

In 15 years i haven't seen a qualified (to western standards) engineer in Thailand...now i won't even let them pump my tires because the garage even doesn't have a pressure gauge to do that properly.

 

So will thailand become the hub of maintenance for planes? I don't think so.....

[AntDee]

The EEC is a great idea to help Thailand escape the middle income trap and move up the value chain. However, I must be cautiously optimistic as after a decade working here and realizing how stubborn Thai industry is to foreign help. 

Will Thailand finally move beyond the "us versus them" mantra, hire and listen to foreign expertise??? 

If not, they will not be successful. 

[mok199]

'' Thailand has talent''(and not just at the gogo's)  ace mechanics ,welders and mechinists,but Thailand has the worst too...motivation ,responsibility ethics and a sense of pride goes a long way,and that starts with the employer...pay a fair wage with bennifits ,and provide good onsite housing  ( not a stinky small room with a fan),offer a chance to advance,offer pensions so employees stay with a company..you cant have a high turnover rate and expect quality staff...Thailand can meet international standards all day long...

[Cadbury]

1 hour ago, webfact said:

Thai Airways International Plc (THAI), said the airline expected to submit the feasibility study for the project to Prime Minister Prayut Chan-o-cha by this month or the next

I doubt the PM would know what a feasibility study was, or even looked like. Ask him if a feasibility study was done for Thai Niyom funds he throws around with great abandon. I have never heard mention before of a feasibility study being done for anything in Thailand. Everything seems to ratified by a show of hands by clueless minds at a committee meeting.

Anyway I hope they get it off the ground so to speak but on the past record of this four year old government actually achieving anything I am afraid it hasn't got much hope.

[jackinthebox]

U-Tapao airport itself is expected to attract an increasing number of visitors, jumping from around 30 million a year now to 60 million in the next five years.

At least 15 million of the actual 30 million are "Pataya-Tourists". Do they really expect these numbers to double within 5 years? I can imagine where theses visitors would come from (India, China, Russia...) but- where should they all go?

[stanleycoin]

Looks like Thailand has a very short memory.

I'm sure airline companies can remember what happened,  a few years back at BKK

airport. !!!!!!!!!!!!!!!, something to do with protesters.

Hub of,   Short Term Memory loss,   is more like it.  

 

 

 

[yellowboat]

The words "THAI" and "maintenance" in the same sentence do not conjure up a sense of comfort.  Also 50/50 looks to be a loosing proposition.  Thailand, as of late, has proven itself not to be business friendly.  Neighbors like Vietnam, Malaysia have similar costs, hard working people and are more inviting.  

[mikebell]

I agree with yellowboat above: the reason why 2nd hand cars pre-owned by farangs command a premium is we believe in servicing our cars regularly.  The average Thai couldn't and wouldn't  service a front garden gate.

[Khun Paul]

I would not trust THAI Airways to maintain a shopping  trolley let alone other people planes. it is not the company but the undeniable LACK  of PRIDE  in their work that so often Thai works show , slipshod, makeshift attempts to make good all resemble a worker who may well be skilled but shows zero incentive in doing a good job . That frightens me if you are talking about planes. They screw up car maintenance, just think what they could do with a plane. does not bear thinking about 

 

[Lupatria]

4 hours ago, Thian said:

In 15 years i haven't seen a qualified (to western standards) engineer in Thailand...now i won't even let them pump my tires because the garage even doesn't have a pressure gauge to do that properly.

 

So will thailand become the hub of maintenance for planes? I don't think so.....

State of the art as well as a selection of traditional tools,  sponsored by our generous shareholders, are ready for pickup: 

       

[AntDee]

Others above have expressed this, but it bears repeating. While many nationals are highly skilled, the main issue is one of culture and a chronic lack of attention to detail plus a propensity to focus on appearances of competence. 

 

Ask the Japanese, who are world renowned for their EARNED pride, about Thai propensity for cutting corners and focusing on form over function. 

 

Thais will not like the fact, but they have earned their reputation. I hope they can change. 

[smutcakes]

THAI are just biding time and pushing paper around. Having their maintenance center based at Utapao rather than Swampy is ridiculous. They are the national aircraft carrier and the national airport, that is where they want to do their maintenance. from a financial aspect how would repositioning their planes from Swampy to Utapao and back again every time they needed maintenance work be a good model.

 

That is before talking about the majority of top brass and management being located in Bangkok and not wanting to be in Utapao.

 

My view is they are just talking and talking and waiting for the initial EEC frenzy to wear off before it dies a death somewhere.

[FinChin67]

"50/50 joint venture between Thai Airways International and..."

 

Thats the first problem right there for the foreign investor / partner.

Even 100% guarantees nothing in Thailand..

 

+ competition from China (Haeco) etc. will not make this so easy.

[Baerboxer]

7 hours ago, Thian said:

In 15 years i haven't seen a qualified (to western standards) engineer in Thailand...now i won't even let them pump my tires because the garage even doesn't have a pressure gauge to do that properly.

 

So will thailand become the hub of maintenance for planes? I don't think so.....

 

Pump your tires? Where the <deleted> do you live?

 

Go to just about any garage and use the air machine like the rest of us. They have an nice hose that you can use and a nice gauge that makes a noise when you reach the required pressure. Some even have a tap so you can wash your hands!

[Oziex1]

Not sure about this stuff, some work in required at Swampy, buses from the plane to the terminal cmon you can do better than this.

[OnTheRun]

3 hours ago, yellowboat said:

The words "THAI" and "maintenance" in the same sentence do not conjure up a sense of comfort.  Also 50/50 looks to be a loosing proposition.  Thailand, as of late, has proven itself not to be business friendly.  Neighbors like Vietnam, Malaysia have similar costs, hard working people and are more inviting.  

The Malaysian labour force is miles behind Thailand in the industry I work in (oil & gas). Given a choice between the two I'd take Thai nationals every time. 

[zydeco]

I don't see how Thailand could possibly replace Singapore as the regional leader. It might have been possible had Thais built upon the advantage they had 43 years ago, after the Vietnam War, when the country had many, many American trained and qualified aviation mechanics and technicians.  Not only from working with the USAF but with operations like AAM. That is what happened in Taiwan. But instead Thailand kicked out the Americans. Too many other players in this game now. 

[newcomer71]

Another hub that will never become real... Next please.

[selftaopath]

Maintenance and Thailand in the same sentence ?  Must be something not close to Isaan b/c I don't think the word/action exists around here. 

 

Replacement parts for anything seems practically non existent - or maybe I just look in the wrong places e.g. HomeHub/HomePro/DoHome/GlobalHouse/ThaiWatsado/ local auto and electrical shops etc. But many of these places will sell new items. ?????????? 

[RichardColeman]

Everything is OK, he has these guys hotline number for when the engineering goes awry !

[Rally123]

7 hours ago, webfact said:

THAI bets big on maintenance hub

I thought gambling was illegal in Thailand?

[fakename]

Yeah, Thai welders are the best, they either close their eyes, or use a pair of sun glasses. 

[Srikcir]

7 hours ago, webfact said:

The MRO Campus will be owned and invested in by the Royal Thai Navy under a right granted by the Treasury Department.

Some major questions:

• What exactly does the Treasury (aka Thai taxpayer) get in return for the grant?
• Specifically what is being granted?
• Where does the Navy get its investment funds - internally (ie., unallocated slush fund)?
• Will the Navy be able to keep all its revenues from the MRO while the Thai taxpayer continues to pay for the military's annual defense budget?

As the MRO Campus will operate in the EEC wherein Prayut invoked Article 44,  it will be exempt from local government authorities for such things as city planning, environmental impacts, affect on existing infrastructure and human support systems. Where are the costs for such impacts going to come from? 

As THAI is partially owned by the State, isn't there a significant conflict of interest with the Thai government who regulates the EEC and the Navy as an investor?

 

[NanLaew]

7 hours ago, Thian said:

In 15 years i haven't seen a qualified (to western standards) engineer in Thailand...

Haven't been looking too hard eh?

[NanLaew]

1 hour ago, zydeco said:

Too many other players in this game now. 

..and they're probably a lot more qualified on current air technology than the US-trained, Vietnam era, old technology, limited airframe experts of yesteryear.

[NanLaew]

1 hour ago, selftaopath said:

Maintenance and Thailand in the same sentence ?  Must be something not close to Isaan b/c I don't think the word/action exists around here. 

 

Replacement parts for anything seems practically non existent - or maybe I just look in the wrong places e.g. HomeHub/HomePro/DoHome/GlobalHouse/ThaiWatsado/ local auto and electrical shops etc. But many of these places will sell new items. ?????????? 

Any old Thailand hand worth his salt knows enough of the lingo to get the Thai name for the part and shops for it by name at the mom and pop hardware stores, where the locals shop. Buggering about in the air-conditioned aisles of any of the stores you mention is only good for the cool air... if you can fend of the aisle stalkers.

[KiwiKiwi]

More hot air. Give him 2 years then ask why it didn't work.

 

The only things Thailand is a hub of are stupidity and BS.

[NanLaew]

43 minutes ago, Srikcir said:

Some major questions:

• What exactly does the Treasury (aka Thai taxpayer) get in return for the grant?
• Specifically what is being granted?
• Where does the Navy get its investment funds - internally (ie., unallocated slush fund)?
• Will the Navy be able to keep all its revenues from the MRO while the Thai taxpayer continues to pay for the military's annual defense budget?

As the MRO Campus will operate in the EEC wherein Prayut invoked Article 44,  it will be exempt from local government authorities for such things as city planning, environmental impacts, affect on existing infrastructure and human support systems. Where are the costs for such impacts going to come from? 

As THAI is partially owned by the State, isn't there a significant conflict of interest with the Thai government who regulates the EEC and the Navy as an investor?

 

You are over thinking this whole enterprise's raison d'être

 

It's called a reach-around.