12 carriers fret over losses due to licensing hold-up

The 12 remaining Thai-registered carriers that were unable to get their licences recertified by yesterday’s deadline could face significant financial losses, analysts said.

They are expected to feel the pinch as the Civil Aviation Authority of Thailand (CAAT) started banning their international air services from today.

The effects are likely to vary depending on a range of factors including how long the CAAT takes to get the air operator certificates (AOCs) re-issued and how strong each airline’s financial status is to weather the grounding time, analysts said.

Other factors include their reliance on international flight business and whether they can get their business on track when the licences are settled, they added.

K-Mile Thailand, the air cargo operator that is 45%-owned by Dublin-based ASL Aviation Group and which operates out of Suvarnabhumi airport, will have to completely suspend its international air-freightlifting business, its sole operation.

Thai-registered airlines that rely mostly on international flights, mostly on a charter basis, are due to suffer the most if their licensing paperwork falls short.

Asia Atlantic, a joint venture between Japanese travel agent HIS and Thai hotelier Baiyoke Group, and China-focused Orient Thai, are two carriers that fall under this bracket.

Thai VietJet Air (TVJA) faces a smaller hurdle as it only has to temporarily suspend its sole international route between Bangkok and Hai Phong due to help from its Vietnamese parent VietJet Air.

TVJA’s three domestic routes — Bangkok to Chiang Mai, Bangkok to Phuket and Phuket to Chiang Rai — are not affected by the CAAT’s move.

At a meeting on Wednesday chaired by Transport Minister Arkhom Termpittiyapaisith many airlines vented their grievances about the plan, sources told the Bangkok Post yesterday.

Operators said they should not be penalised by the CAAT’s delay in re-certifying their AOCs as they were ready to be audited.

They maintain the CAAT has been struggling due to a shortage of staff who can perform the task in time to meet its yesterday deadline.

This was seen by the industry as rushed, ambitious and unrealistic given the state agency’s limited resource to carry the entire AOC re-certification process.

But the CAAT insists the deadline is needed to align with the available time lots by the International Civil Aviation Organisation (ICAO) to audit the CAAT.

The ICAO is due to conduct an audit on CAAT and its efforts to deal with “significant safety concerns” in the third week of September.

Completing the AOC re-certification is considered instrumental in the CAAT’s struggle to restore Thailand’s aviation safety credentials after being red-flagged by the UN’s aviation watchdog in June 2015.

The CAAT has so far re-certified the AOCs of nine Thai-registered operators including Thai Airways International, Thai AirAsia and Bangkok Airways in compliance with the stringent global standards set by the ICAO.

CAAT director-general Chula Sukmanop told the Bangkok Post last week that the re-certified airlines represent 98% of all international passengers carried by Thairegistered airlines last year.

The affected airlines have asked for remedies from the CAAT.

Meanwhile, Minister Arkom has instructed the Thai authority to discuss individually with affected airlines remedies specific to their needs.

The CAAT chief suggested it may allocate traffic on certain Thai domestic routes to affected airlines as a temporary measure.

Dr Chula said the official results of the ICAO audit will be released in October and may effectively remove the red flag.

Mr Arkom told Wednesday’s meeting the ICAO red-flag issue should be settled by year’s-end.

But affected airlines have expressed concern the AOC re-certification may take longer.

Small-time operators may not be able to stay in business as many face a credit squeeze from banks, sources said.

“I don’t really want any remedy rather than getting the CAAT to carry out the audit on us as quickly as possible and promptly re-issuing our AOC,” Jaiyavat Navaraj, executive chairman of private jet charter firm Mjets, told the Bangkok Post yesterday.

He said Mjets has been ready for the CAAT’s audit for a while but officials were unable to meet the Aug 31 deadline.