THAILAND: AEROSPACE INDUSTRY

Transcription

1 THAILAND: AEROSPACE INDUSTRY

2 Table of Contents Industry Overview Page Content 2 Industry Overview 3 Aerospace Industry in Thailand 17 Why Thailand? 22 Investment Incentives Aerospace Industry Sees High Growth Over the past 30 years, the airline industry has grown exponentially due to escalating global travel demand. Passenger air traffic has doubled every 15 years since the early eighties 1, and is expected to grow at an average annual rate of 3.8% over the next 20 years to reach 7 billion passengers in There is massive economic promise in the Asia-Pacific region given the forecast of a 20-year annual growth rate at 4.1%. In 2034, the region as a whole will account for 42% of global passenger traffic, with an extra 1.8 billion passengers. Given its immense growth potential and budding opportunities, many world-class aerospace companies are looking to expand and locate their business in the Asia-Pacific region. Global Air Passengers by Region 2 [In Percentage of Total Flows] * Asia Pacific Europe North America South America Middle East Africa Source: 1 Airbus Global Market Forecast Report, 2016; 2 International Air Transport Association (IATA) 1 2 Note: *forecasted

3 Aerospace Industry in Thailand Cascading Expansion in Thailand s Domestic Market Thailand s aviation growth is seeing rapid expansion as the center of gravity for global aviation shifts to the Asia-Pacific region. This is reflected in the steady growth of total air traffic in the country over the past several years. Thailand s air traffic is rising at 3 times faster than the global market. It has increased at an average annual rate of 13.14% and 13.54% for total aircraft movement and passenger movement respectively, during Airports World-Class International Airports with Huge Expansion Plans The prominence of Thailand s aviation industry is highlighted by significant growth in the amount of airline traffic, cargo movements and number of passengers passing through Thailand s international airports. 38 Commercial Airports in Thailand 1 Thailand Aircraft Movement 1* [In 000 Flights] %** Domestic International Of all 38 commercial airports operating under many organizations and associations. However, there are 12 international airports covering all key destinations in Thailand. 2% Aircraft movement in fiscal year * [In 000 Flights] 12% 3% 8% % 27% 39% Mae Fah Luang-Chiang Rai International Airport (CEI) Chiang Mai International Airport (CNX) Udon Thani International Airport (UTH) Ubon Ratchathani International Airport (UBP) Thailand Passenger Movement 1* BKK DMK HKT CNX HDY CEI Others Don Mueang International Airport (DMK) [In Million Passengers] 13.54%** Domestic International Passengers movement in fiscal year * [In Million Passengers] 1% 10% 3% 7% 11% 24% % BKK DMK HKT CNX HDY CEI Others Suvarnabhumi Airport (BKK) U-Tapao International Airport (UTP) Samui International Airport (USM) Surat Thani International Airport (URT) Krabi International Airport (KBV) Phuket International Airport (HKT) Hat Yai International Airport (HDY) Source: 1 Airport of Thailand PLC. (AOT), Department of Civil Aviation (DCA) Note: *For fiscal year: Oct-Sept **Compound Annual Growth Rate Source: 1 Airport of Thailand PLC.(AOT), Department of Civil Aviation (DCA) Note: *For fiscal year: Oct-Sept 4

4 International Airports under Airport of Thailand PCL (AOT) Operation To capture the demand and boost further growth in the Thai aviation industry, AOT is developing master plans to enhance the capacity and quality of Thailand s international airports. Chiang Mai International Airport (CNX) Phuket International Airport (HKT) Suvarnabhumi Airport (BKK) Aircraft Capacity 68 Flights/Hour Passenger 45 Million/Year Cargo 1,700,000 Metric Tons/Year As Thailand s air traffic has grown at a dramatic rate, exceeding the maximum airport capacity, AOT began the Suvarnabhumi Airport Development Project valued at THB 62,503 million with completion scheduled for The construction project covers three main areas including the Midfield satellite 1, passenger terminals, and utilities. Aircraft Passenger Capacity Hat Yai International Airport (HDY) Capacity 24 Flights/Hour 8.0 Million/Year Cargo 36,000 Metric Tons/Year Aircraft Passenger Capacity 23 Flights/Hour 6.5 Million/Year Cargo 1,700,000 Metric Tons/Year Mae Fah Luang-Chiang Rai Intenational Airport (CEI) Capacity Aircraft 18 Flights/Hour Aircraft 16 Flights/Hour Don Mueang International Airport (DMK) Passenger 2.5 Million/Year Passenger 3.0 Million/Year Capacity Cargo 14,000 Metric Tons/Year Cargo 3,000 Metric Tons/Year Aircraft 40 Flights/Hour Passenger 30 Million/Year Cargo 211,000 Metric Tons/Year The Don Mueang International Airport Master Plan is currently in the 3 rd phase. This development project aims to increase the airport and runway capacity and further enhance Thailand s aviation landscape. 5 International Airports under other Organizations and Associations Apart from the above mentioned, there are many international airports such as Krabi international airport (KBV), U-tapao international airport (UTP), and Samui International Airport (USM) under the operation of these organizations and associations 5 Department of Civil Aviation (DCA) Bangkok Airways PCL Royal Thai Navy 6

5 Airline Business Maintenance, Repair, and Overhaul (MRO) Largely Untapped Maintenance, Repair, and Overhaul (MRO) Sector Growth of Airlines Business Driven by High Air Traffic The airline business in Thailand continues to prosper as the number of visitors to Thailand increase. The expansion of Thai Airlines is mainly driven by dramatic rise in the demand for low cost carriers. Currently, the market share of low-cost airlines contributes to only about 30% of the total market share, which showcases the huge growth opportunity in this sector Airline Market in Thailand, Market Share - International and Domestic Flights Market Share Domestic Flights Only An increase in overall air traffic and the population s increasing use of low-cost airlines signify the fiscal promise that exists in Thailand, not only in aviation but also in its multi-billion dollar aircraft service maintenance, repair, and overhaul (MRO) sector. Commercial airlines MRO expenses are estimated to reach USD 12 billion by 2024 in the Asia-Pacific region, and approximately 6.3% of that expenditure is forecast to occur in Thailand 1. Hence, Thailand welcomes numerous foreign investors in the MRO business as this fastgrowing business still has immense opportunity for growth. LCC, 30% 28% Total Thailand s MRO Expenditure Forecast in [In USD Billion] Others, 37% 7% 26% 27% 22% %* % 9% A surge in Thailand s air traffic has also led to the expansion of domestic airlines, boosting the number of new airplanes. In 2014, Thailand made a purchase order out for 55 brand new fleets 1, including fleet models A320s, A XWB, B737-8, B787-8/9, and Bombardier Q402(NG) Source: 1 Office of Transport and Traffic Policy and Planning (OTP), Ministry Source: 7 1 Aerospace Engineering Faculty, Kasetsart University of Transport 8 Note: *Compound Annual Growth Rate

6 Over this decade ( ), Thailand s MRO expenditure has been forecasted to reach a total amount of USD 10.6 billion. With Thailand s location at the heart of ASEAN, and the presence of an extensive network of international airports all around the country, Thailand s MRO market is expected to expand even further with new investments in Research and Development (R&D) and high technology machineries. Thailand s present MRO focus is on components, engines, and line maintenance; the top five components that are expected to bring in the most capital to Thailand MRO market includes LG wheels & brakes, APU, IFE components, engine-fuel and control, and landing gear. These five components have been forecasted to generate more than USD 1.7 billion over the next 10 years ( ) 1. Thailand s MRO Spending, [In USD million] Top 5 Total Component MRO Spending Forecast, Thailand [In USD million] LG Wheels LG && Brakes APU Components Engine Line Maintenance Maintenance Airframe Heavy Modifications IFE IFE Components Engine Engine - Fuel and Control Fuel and Control Landing Gear In 2015, the total MRO expenditure in Thailand was USD million or only around 40% of the total Thai MRO expenditure is spent in Thailand. The opportunity on investment in services such as engine, line airframes and core parts maintenance are still high. This leaves room for substantial growth for multinational MRO companies in Thailand. Thailand s Targeted Sectors for MRO Airframe MRO including A320 or NEO B737NG, or B737 MAX Engine MRO including CFM56-5B/LEAP 1A, CFM56-7/LEAP 1B, etc. Component MRO - especially on landing gear, wheels and brakes, APU, engine fuel and control, and IFE Source: 1 Office of Transport and Traffic Policy and Planning (OTP), Ministry of Transport Source: ; 1 Geo-Informatics and Space Technology Development Agency (GISDA); 2 Frost & Sullivan 9 10

7 Major International MRO Companies in Thailand Triumph Aviation Services - Asia. This new company was formed to become Triumph Group's Asia-Pacific aftermarket services headquarters and one-stop service center for all of Triumph Group's inregion MRO activity. The company has invested over $25 million USD in the new facility which is poised to be recognized among the finest MRO centers anywhere in the world. TASA Capabilities include: Auxiliary power units (APU) and related accessories (LRU) Engine nacelle Components including thrust reversers, nose cowls and fan cowls Accessory (LRU) support Composites & bonded airframe structures Core APU & piece part repairs Structural repairs Aircraft accessories Scandinavian Aircraft Maintenance (SAMTHAI) was founded in 2009 as a subsidiary of SAM AERO AS. The company entered into a joint venture with Thai Aviation Industries to plan and develop the construction and operation of the Aviation MRO & Centre of Excellence in Bangkok. SAMTHAI also signed an agreement with the Directorate of Aeronautical Engineering (DAE) to support & supply the Thai Royal Flight, Royal Thai Air Force, Royal Thai Army and Thai Police with spare parts for numerous aircraft & helicopters through the Associated Aircraft Group (AAG) Canada. SAMTHAI is also cooperating with Geven to supply and install new seating for Thai International Airways aircraft. Chromalloy Thailand, first established in 1989, is trusted worldwide to provide commercial aviation engine manufacturers with a wide range of innovative, high-technology repair options to support ever-growing long term service agreements and power-by-the-hour programs. Chromalloy Process Capabilities Include: Engineering Coatings Machining Joining technology Thermal processing Rolls-Royce has developed strong long-term relationships with key businesses in Thailand including Thai Airways International, Bangkok Airways and all three military branches; Royal Thai Air Force, Royal Thai Army, and Royal Thai Navy. Rolls-Royce has recently signed a long-term TotalCare service support contract with Thai Airways International Public Company Limited (THAI) for Trent 1000 engines that power six Boeing Dreamliner aircraft

8 Manufacturing Base Excellent Manufacturing Base Thailand is a perfect manufacturing base for foreign companies because of its competitive wages, strong logistic systems and extensive supporting facilities. Currently, Thailand s expertise is on Tier 3 component manufacturing and Tier 4 composite manufacturing for original parts manufacturing (OEMs). The aviation manufacturing market in Thailand continues to show great promise. There is plenty of opportunity for foreign companies to explore this market, especially in higher tiers of aviation manufacturing. Aviation Manufacturing Supply Chain Thailand s aircraft and aircraft parts, and equipment market has seen continual, robust growth over the past few years. In 2015, aircraft, spacecraft and parts (HS code 88) was still Thailand s largest aircraft import sector, with imports valued at US$ 3.3 billion. Imports and Exports of Aircraft Parts and Equipment, HS Code Description Imports ( US$ million) Exports (US$ million) OEM Tier 1 Tier 2 Tier 3 Design, assembly, integration (and service) of an aircraft Engine, navigation system, electrical power, fuel system Aviation part, apparatus, electronic, propeller Gear, screw, bolt, structure cable, electrical wire Aircraft, spacecraft and parts Ignition wiring sets & other wiring sets for vehicles and aircraft 3, Aircraft engines New pneumatic tires, of rubber, of a kind used for aircraft Laminated safety glass for vehicles and aircraft Thailand s Targeted Sectors for OEM Tier 2 & 3 Component Manufacturing Tier 4 Composite Manufacturing Source: 1 Ministry of Commerce (MOC) 13 14

9 Major International Manufacturing Companies in Thailand Triumph Structures is a Tier II integrator of aircraft parts and assemblies. The company is the industry leader in swaged tubular products and wire rope mechanical cables. Triumph Structures is also an industry leader in high technology composites including acoustically treated engine liners, aircraft structures and medical applications. Triumph Structures produces a number of products in Thailand, including machined and composite parts, and assemblies. Leistritz, a German company, was founded in Leistritz has manufactured turbine blades for aircraft and rocket engines, gas and steam turbines. Leistritz is a global supplier of components for the international aero engine and power generation industry. Leistritz has signed a manufacturing agreement with Rolls-Royce, a global power systems company. Leistritz established a manufacturing base in Chonburi, Thailand for the forging of compressor blades to be as a Tier II supplier of Rolls-Royce. Ducommun Technologies (DTI), a California based company, produces structural and electronic components and subassemblies for a wide range of aircraft. In Thailand, DTI has a manufacturing facility in Saraburi province to produces commercial microwave switches to service the growing demands in the international markets. AVIA Satcom Co., Ltd. is one of Thailand s leading companies in providing high level of expertise and is equipped to modify a range of aircrafts. The company has capability to develop engineering designs for modifications, adjustments, installations and integration of avionics systems and special mission equipment such as FLIR, SAR, radar and communication systems. AVIA Satcom has teamed up with SAAB, a Swedish aerospace and defense company, to bring world-leading products, services and solutions. This partnership enabled the transfer of advanced Swedish aerospace technologies to Thai defence. Senior aerospace specializes in the manufacture of both structures components and assemblies, and compressor aero foils for high volume aero-engine programs. It is located in Chonburi province. Driessen Aircraft Interior Systems, part of Zodiac Aerospace, specializes in designing, manufacturing, and marketing high quality galleys, galley equipment and cargo equipment. Driessen s manufacturing facilities in Lamphun and Samutprakarn province specialize in galley, galley parts, airline products, trolley and trolley parts Goodyear Thailand manufactures and distributes a range of tires for automobiles, trucks and aircraft. The Goodyear brand has been visible in Thailand for over 50 years, while manufacturing facilities were established here in 1968 to serve the local and overseas markets. For the better part of a century, Goodyear's corporate values have been centered on the phrase, "Protect Our Good Name." Goodyear Thailand is listed on the Stock Exchange of Thailand. Cobra International Co., Ltd. In Chonburi province,thailand, is the world leading OEM manufacturer of high-end composite products. Cobra manufactures a wide range of products, components, and parts for aerospace and industrial applications. The company's focus is providing customers with production solutions to deliver the highest quality products to meet each customers specific needs. Established in 1987, Michelin Siam Group is a leading manufacturer and distributor of tire products covering a wide range of sections from passenger car and light truck, truck and bus, motorcycle, earthmover to airplane tires under the brand names Michelin, BFGoodrich and Siam Tyre. Michelin Aircraft Tyre supplies bias tyres, radial tyres, and tubes for the worldwide aviation community 15 16

10 Why Thailand? Expanding the Thai Aviation Sector 2 Free Trade Zone A 230 hectare bonded free trade zone with direct connections to cargo terminals and a MRO hub. This zone is intended as a major distribution center as well as a destination for aerospace OEMs and other high value export-oriented industries. Within the zone is a 15 hectare commercial cluster for services, amenities, and offices as well as a dedicated customs office. There is also an intermodal freight terminal with a direct rail link that will eventually provide access to the greater Mekong region. The expansion planned for U-Tapao-Pattaya International Airport covers over 400 hectares and will be tailored to serve the aerospace and aviation industry providing excellent options for a range of related companies. Combining a bonded free trade zone with direct runway access and an intermodal freight rail yard, aerospace businesses can take full advantage of U- Tapao's two Code F runways as well having easy access to large industrial estates 30 km to the north in addition to two major ports (Laem Chabang and Maptaphut). The Industry Zone Plan Includes 4 Relevant Components: 1 Maintenance, Repair, & Overhaul (MRO) Hub A 92 hectare MRO hub with a dedicated apron for all hangars, additional aircraft parking areas, and 24/7 runway access. Planned for up to 12 Code F hangar bays and three major workshops. Landside access is via a dedicated U-Tapao Airport Industry Zone access road that in the future will link directly to the extension of Highway Cargo Zone With 70 hectares, this zone has a dedicated apron area for all terminal facilities and space to provide traditional terminals, dedicated specialist processing facilities, and air cargo express trans-shipment hubs. An airside tunnel connects directly to the passenger terminal providing easy access for belly-hold cargo. Aviation Training Center A 32 hectare aviation training center will provide more than just pilot and airline crew training. Dedicated maintenance and technical staff training will provide a capable employee resource pool for aerospace firms seeking to establish a presence in Southeast Asia

11 Robust Human Resources Human resources represent another key consideration with respect to making investments. Thailand offers abundant, highly-skilled labor at competitive costs compared to other Asia-Pacific countries, lowering the cost of production for foreign companies. Academic Institutions Thailand creates over 180,000 engineers and 200,000 scientists annually 1. Over 6 leading academic institutions in Thailand offer degrees in Aerospace Engineering and related fields including: 1) Kasetsart University 2) King Mongkut s University of Technology 3) Suranaree University of Technology 3) Chulalongkorn University 4) Thammasat University 5) Assumption University 6) Rangsit University Aviation Training Centers Approved by CAAT 2 Various types of aviation training centers approved by the Civil Aviation Authority of Thailand (CAAT) are also available around the country, including: Other Aviation Training Centers Pan Am Academy Thai Airways Crew Training Center Pan Am International Flight Training Center Thailand is now open for A-320 & Boeing 737 NG training. Located at the beautiful Assumption University s Suvarnabhumi Campus. Pan Am International Flight Academy and All Nippon Airways have joined with Nok Air and Assumption University to create this world class training center. The Thailand training center currently houses an Airbus 320 Full-Flight Simulator and Airbus 320 Multi-functional Training Device as well as a Boeing 737 NG simulator to meet the needs of airlines and pilots in the region. Thai Airways International Public Company Limited provides both flight simulators and cabin crews training. Flight simulator training center is located at Thai Airways International Head Office, Bangkok. THAI operates a total of eight level-d full flight simulators including A , B , B , B /300, B777ER, A , A and A In addition, Maintenance Flight Training Devices (MFTD) A330 and A340 are also available for more basic aspects of instruction. THAI also offers different types of cabin crew training at Laksi office, Bangkok. All training sessions are conducted and supervised by highly experienced instructors and well-trained engineers. Center Civil Aviation Training Center (CATC) Bangkok Aviation Training Center Royal Skyways Royal Thai Air Force Training Center Young Eagle Co., Ltd. Thai Flight Training Co., Ltd. Sri-racha Aviation Co., Ltd. Nakhonpanum University Thai General Aviation Technology Location Bangkok Bangkok Bangkok Bangkok Bangkok Bangkok Chonburi Nakhonpanum Pathumthani Source: 1 Office of Transport and Traffic Policy and Planning (OTP), Ministry of Transport, 2 The Civil Aviation Authority of Thailand (CAAT) 19 Source: Panamacademy, Thaiairways 20

12 Strong Supporting Organizations Apart from having great infrastructure and a competitive workforce, several organizations support and maintain the laws and regulations of Thailand s aerospace industry ensuring that it meets world-class codes of conduct. Aeronautical Radio of Thailand Ltd. (AEROTHAI) Investment Incentives BOI Incentives BOI recognizes the importance of aerospace industry, and offers a wide range of tax and nontax incentives for projects that meet national development objectives. Role and Responsibilities Air Traffic Management (ATM) within the Bangkok Flight Information Region (Bangkok FIR) for the safety and efficiency of flights of Thailand s airspace users. Communications, Navigation, and Surveillance (CNS) System/Services. Aeronautical Information Services (AIS) and Aeronautical Charts. The Civil Aviation Authority of Thailand (CAAT) Role and Responsibilities Enforce laws on air navigation, aviation liability, and other relevant laws Promote and develop the network of air transport system, aviation industry, and civil aviation Prescribe, regulate, and audit implementation of civil aviation Cooperate and liase with relevant domestic and international civil aviation organizations as well as organizations related to relevant conventions and agreements Etc. GROUP A1 A2 Tax Incentives ELIGIBLE ACTIVITIES Manufacture of Aircraft or Aircraft Parts Manufacture of Aerospace Devices and Equipment Aerospace Operating Systems Vocational training centers Repair of Aircraft or Aircraft Parts INCENTIVES Corporate income tax exemption 8 years without cap 8 years Exemption of import duty* Airports of Thailand Public Company Limited (AOT) Role and Responsibilities Developing capability of the 6 AOT s airports leading to roadmap formulation for development of infrastructure Managing and increasing airport handling capacity to serve the increasing air traffic movements in the future improving airport operations and management in order to offer fast, convenient and highly efficient services A3 Manufacture of Onboard Devices and Equipment (except disposable and reusable aircraft utilities and supplies) Aviation or Aerospace Industrial Zones or Industrial Estates 5 years Note: *Exemption of import duty on raw or essential materials and machinery used 21 in manufacturing export products 22

13 Investment Incentives GROUP ELIGIBLE ACTIVITIES INCENTIVES Corporate income tax exemption Exemption of import duty* BOI s Worldwide Network A4 Repair of Onboard Devices and Equipment (except disposable and reusable aircraft utilities and supplies) 3 years B2 Trade and investment support offices (TISO): Engineering service Only Non-tax Incentives Non-Tax Incentives These activities also receive the following non-tax incentives: Permit to bring in expatriates Permit to own land Permit to take or remit foreign currency abroad Note: *Exemption of import duty on raw or essential materials and machinery used in manufacturing export products 23 24