Wednesday, December 02, 2015

Thailand Plays Down Federal Aviation Administration Reduction of Aviation Safety Rating: Concern now focuses on audit due soon from European aviation agency

The Wall Street Journal
Updated Dec. 2, 2015 5:25 a.m. ET

BANGKOK—Thailand’s military-installed government Wednesday scrambled to minimize the potential impact from the U.S. Federal Aviation Administration’s move to downgrade its safety rating on the tourism-dependent country’s aviation industry.

Its biggest concern now is that the European Aviation Safety Agency might follow suit and downgrade Thailand. That would affect the ability of state-controlled Thai Airways International PCL to add flights to the 11 European destinations it currently serves. The EASA is scheduled to release the results of its own audit of Thailand’s aviation system on Dec. 10.

“Normally, we do not fly to the U.S. anyway,” Deputy Prime Minister Somkid Jatusripitak told reporters, referring to how Thai Airways stopped direct flights to America in October. “About EASA, you must ask if Thai Airways has any backup plans.”

Thai Airways President Charamporn Jotikasthira said he wasn’t ready to disclose what the airline would do in the event that the European agency also downgrades Thailand. He said revenue generated from European destinations accounts for a third of the airline’s total.

The FAA cut Thailand’s safety rating to category 2 from the top-tier category 1 rating because of its concerns about the country’s ability to properly supervise the growth of the booming aviation business. Its announcement in Washington Tuesday put Thailand alongside six other category 2 countries, including Ghana and Indonesia, and prevents Thailand-based carriers from adding new flights to the U.S.

Prime Minister Prayuth Chan-ocha, Thailand’s former army chief who seized power in a military coup last year, told reporters he had ordered aviation authorities to quickly address the FAA’s concerns.

“We must accept that our standards do not meet the conditions,” Gen. Prayuth said. “We all must help while I will try to restore peace and order in the country.

The FAA downgrade doesn’t necessarily mean that Thailand-based airlines, which also include the local affiliate of AirAsia Bhd., are unsafe. Rather, it indicates that aviation regulators are unable to provide sufficient oversight of the industry.

Thai Airways, Thailand’s largest carrier, shrugged off the initial impact of the FAA downgrade. “For Thai, there is no commercial or customer impact as Thai had already ceased operations to its only U.S. destination of Los Angeles as of 25 October 2015,” the company’s president, Mr. Charamporn said.

Tourism industry executives were less sanguine.

“Even though there are currently no Thai carriers flying to the U.S., Thailand aviation authorities have to take this warning seriously and urgently develop a plan to improve its safety rating as soon as possible,” said Mario Hardy, chief executive officer of the Pacific Asia Travel Association in Bangkok. “The implications from the possibility of a similar review from Europe would be disastrous to Thai carriers and tourism in the country.”

“The only thing I can do is pray to God that we will get a passing grade,” said Charoen Wangananont, president of the Association of Thai Travel Agents. “Action must be taken fast.”

The FAA’s downgrade comes amid growing concerns over airline safety in parts of Asia.

On Tuesday, a crash investigation report into the loss of AirAsia Flight 8501 in the waters between Surabaya, Indonesia, and Singapore last December, found that system malfunctions and improper pilot responses were to blame, All 162 people on board were killed. The disappearance of Malaysia Airlines Flight 370 in March last year with the presumed loss of all 239 people on board, meanwhile, remains unexplained.

It could take some time for Thailand to recover its top-tier ranking with the FAA, though.

It took Israel four years to regain its category 1 status after a downgrade, and the Philippines had to wait more than five after it was downgraded in 2008, although upgrades can happen sooner. It took India just over a year to regain its category 1 status after a downgrade last year, enabling it to add additional flights to the U.S., while Mexico recovered its top-tier ranking after four months after those countries quickly addressed the FAA’s concerns.

Thailand’s challenge will be to rebuild the supervisory infrastructure that governs the industry here and to prevent any lasting damage to tourism inflows.

The country’s economy is growing more dependent on tourism, which now accounts for more than a 10th of Thailand’s gross domestic product as manufacturing and exports slow in the face of sluggish global demand.

Aviation and government officials here say that supervision standards haven’t kept pace with an explosion in the number of foreign tourists coming to Thailand in recent years.

Many of them travel from China, Singapore and Malaysia, and the numbers have grown so much that authorities this summer repurposed an air force base east of Bangkok to help meet demand. Annual passenger traffic at airports run by Airports of Thailand, which accounts for 85% of total capacity here, ballooned to more than 90.5 million in 2014 from 58.2 million in 2010, according to the Australia-based Center for Aviation, turning Bangkok in particular into one of the world’s most-visited cities.

The country’s political conflicts have hampered progress in regulating the boom, though, officials have said. Thailand has seen two military coups and a series of short-lived governments and sometimes bloody street protests since 2006.

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