Lifting of red flag over Thai air safety opens up markets

BANGKOK: Thai airlines can now add flights to the growing China, South Korea and Japan markets after the UN International Civil Aviation Organisation (ICAO) removed a red flag against Thailand over safety concerns, officials said yesterday.

Thailand was downgraded in June 2015 after its regulator missed a deadline to resolve significant safety concerns, meaning that airlines were unable to add further international routes, though they could continue to operate routine flights.

The Civil Aviation Authority of Thailand (CAAT) said the ICAO had made the decision after a meeting on Friday. The Montrealbased UN agency was not immediately available for comment, but the red flag which appeared against Thailand on its website had disappeared.

“Although lifting the red flag is a significant turning point for her aviation industry, Thailand as well as CAAT need to carry on their missions to improve the aviation safety standards,” the CAAT said on its website.

Shares in Thai Airways climbed nearly 8% on the news before falling back to trade at over 5% higher.

Shares in Asia Aviation, which operates as Thai AirAsia, rose as much as 5% and later traded up nearly 4%. Shares in airport operator Airports of Thailand rose over 2%.

The biggest beneficiaries would be smaller carriers, such as Thai AirAsia X, NokScoot and Thai Lion, said Corrine Png, the CEO of Singapore-based transport research firm Crucial Perspective.

“The ICAO downgrade had seriously impeded these new entrants growth to lucrative markets such as Japan and South Korea,” she said. “These airlines can now grow more aggressively. This would, however, imply increased competition for Thai Airways when they expand.”

Thai AirAsia X CEO Nadda Buranasiri said his airline was studying new routes, including to Hokkaido in Japan, after the red flag was lifted.

“We will likely increase routes and frequencies for China, South Korea, and Japan,” he said yesterday, adding Thai AirAsia X now hoped to add three to four aircraft to its fleet next year.

Nok Airlines PCL vice-chairman Patee Sarasin said new routes would be added as slots became available.

Thai Airways lacks enough aircraft to take advantage of the situation and expects rivals will boost routes to other Asian countries, said a source at the national carrier who declined to be named because he wasn’t authorised to speak to the media. – Reuters