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Thailand's Aircraft Industry The aircraft industry in Thailand can trace its origins to the early 20th century when a handful of pilots, trained in France, returned in 1913 to the Kingdom and an air unit was established at Sra Pathum Airfield. Two years later, in need of more space, the airfield at Don Muang was opened. It was that same year that Thailand began manufacturing its own aircraft, as spare parts for foreign models were difficult to come by due to insufficient logistics. The Thai aircraft parts industry was born. Fast forward one hundred years and Thailand has become a regional hub of aircraft maintenance and the manufacturer of parts and components for the aerospace industry, which benefits tremendously from the country's advanced auto manufacturing and electronics industries. In more recent years, as aviation activity has grown, Thailand has become a regional service and maintenance center for refueling, repairing, maintaining and refitting aircraft and a major player in aircraft maintenance industry. Cargo and passenger volumes continue to accelerate, investment opportunities in the aircraft maintenance industry are becoming more numerous and more lucrative. Air passenger movement in Thailand grew at an average annual rate of 14.6% from 2009-2013 as Bangkok became one of the world's top tourist hubs, while Thais themselves increasingly began to travel both domestically as well as


overseas. In 2013, Suvarnabhumi International Airport transported 50.9 million passengers, making it the third busiest airport in ASEAN. It also was ranked 19th in the world for cargo traffic in 2012, with approximately 1.3 million metric tons flowing into and out of the airport. It is estimated that Thailand's aviation sector contributes 139 billion baht (1.5%) to the country's overall GDP. This total comprises 64 billion baht directly contributed through the output of the aviation sector (airlines, airports and ground services); 44 billion baht indirectly contributed through the aviation sector's supply chain; and 31 billion baht contributed through the spending by the employees of the aviation sector and its supply chain. Likewise, there is 678 billion baht in 'catalytic' benefits through tourism, which then raises the overall contribution to 818 billion baht or 9% of GDP. Moreover, the aviation sector supports 393,000 jobs in Thailand. This total consists of 79,000 jobs directly supported by the aviation sector; 185,000 jobs indirectly supported through the aviation sector's supply chain; and 130,000 jobs supported through the spending by the employees of the aviation sector and its supply chain. There are a further 1,802,000 people employed through the 'catalytic' effects of aviation, meaning tourism. Likewise, the average air transport services employee generates 1,321,883 baht in GVA (gross value added) annually, which is over 5.5 times more productive than the average in Thailand. There is no denying that the economic footprint of the Thai aviation industry is significant. Additionally, over 60 public and private engineering institutes across the country are accredited by the Council of Engineers. In 2013, approximately 180,000 tertiary students (vocational and university) graduated in engineering and 200,000 tertiary students completed their studies in the field of science and technology. Furthermore, there are many curricula in aerospace engineering and technology in Thailand, such as Kasetsart University, King Mongkut University of Technology North Bangkok, Thammasat University's Sirindhorn International Institute of Technology, and Suranaree University of Technology. Thailand's Civil Aviation Training Center (CATC) undertakes training for personnel supporting the industry. In cooperation with international airlines, CATC has supplied Thai aviation with a qualified workforce for the ground support, repair and maintenance of aircraft as well as a pilot training program for airplanes and helicopters. In order to strengthen the Thai aviation industry and better contest in a competitive marketplace, the Government of Thailand intends to establish an


aerospace industrial estate and repair center in-country to service the region. The aviation repair center is aimed to support the opening of ASEAN Economic Community in 2015. Such a course of action should meet the trend of growing demand for service in this sector. Of equal importance, Thailand's aircraft and aircraft parts and equipment market has grown over the past few years, with the value of aircraft parts and equipment imports increasing by approximately 47% in 2012, year on year. Aircraft, spacecraft, and parts was Thailand's largest aircraft import sector. In support of the aircraft repair and maintenance sector, several companies already have opened a facility in Thailand, such as Ducommun Incorporated, which produces high-performance and high-reliability commercial microwave switches; Weston SEA Limited, a manufacturer of complex precision components and sub-assemblies, predominantly for the aerospace market, and Primus International Bangkok Company Limited, a Tier II integrator of composites, metallic parts, and assemblies for the commercial, regional, and business aircraft industries; and Driessen Aircraft Interior Systems (Thailand) Limited, a world leader in galley and air cargo equipment for the commercial aviation industry; MRAS Asia, which manufactures aircraft engine parts; and Leistriz (Thailand) Limited, which produces blades for aircraft. Thai Airways International Public Company (THAI), one of the leading transportation maintenance centers in Asia, operates three maintenance centers that service Thai Airways and others. At Suvarnabhumi airport, the THAI maintenance center covers an area of 190,400 m2, including a 24,300 m2 hangar, making it the largest hangar in Southeast Asia. It simultaneously can accommodate three extra-wide-body aircraft such as the Airbus A380. The aircraft maintenance center strictly follows the rules and regulations required by international organizations, including the Department of Civil Aviation of Thailand.


This location can provide technical support for small aircraft, the Boeing B747 and Airbus A380 series, landing gear changes, wheel and brake maintenance, sheet metal work, painting, non-destructive testing (NDT) services, welding, emergency facilities, tools and equipment repair, ground support equipment (GSE) service, and A-checks and C-checks for A380 and maintenance control center (MCC) to handle all problems in line maintenance. Its facilities include: • 3 bays for A380 size aircraft hangar • Size: 270m (length) by 90m (width) by 45m (height) • 26,100 m2 of maintenance apron • 21,450 m2 of office & building • 19,872 m2 of aircraft spare parts store • 5,315 m2 of workshop • 4,833 m2 of ground support equipment Thai Aviation Industries (TAI), an aircraft repair and maintenance service center, was established in 2003. It currently has facilities that include: • an aircraft repair services center • two maintenance service centers for light planes and flight training


• a tool and measurement testing and calibration center • a piston engine repairing division • a propeller repairing facility • an aviation electronics repairing center The Office of the Board of Investment of Thailand (BOI) offers a wide range of fiscal and non-tax incentives for investments in a variety of activities. Taxbased incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions. Nontax incentives include permission to bring in foreign workers, own land and take or remit foreign currency abroad. Additionally, foreign businesses are entitled to 100% ownership. Recognizing the potential of the aviation industry in Thailand's future technological development, the BOI has classified the manufacture, repair or conversion of aircraft, including aircraft parts and equipment or onboard equipment as a priority activity of special importance and benefit to the country. As such, projects receive an uncapped eight-year corporate income tax holiday and are exempt from import duties on machinery, regardless of location. Projects in these activities also are eligible to receive location-based incentives. Thailand's integration into the global air transport network will enable long-term economic growth for the country by opening up foreign markets to Thai exports, lowering transportation costs thereby allowing suppliers to service a wider area and potentially reduce average costs through increased economies of scale, and stimulating the adoption of new business practices, such as just-intime-inventory management, which relies on quick and reliable delivery of essential supplies. Make no mistake that Thailand is aiming to become a centre for aviation in the Asia-Pacific, which will provide full-service for aircraft repair and maintenance, as well as training centre for regional pilots and air crew. Strategically located within the region along with strong supporting industries on aviation, the opportunities for growth and improvement are very high.


Thailand's Aircraft Industry