For Thai Airways, 2015 has been a year of recovery—a reorganization designed to get the airline out of the red and back into the black after years of mismanagement and political turmoil have steadily eroded its bottom line.
While the airline’s reorganization program hasn’t impacted its maintenance center as much as it has the airline itself, there have been changes. An immediate impact is the loss of roughly 200 maintenance workers out of a total of 4,001 employees being cut from the airline’s employment base through a voluntary early retirement program, or Mutual Separation Plan. The 200 employees leaving the technical service represented roughly five percent of the total maintenance staff of 4,191.
These employees most likely will not be coming back, allowing the airline to “stay lean,” according to Charamporn Jotikasthira, the airline’s president. The airline is expected to be back in the black during 2016, and “the crisis should be over by 2017,” said Catipod Keasmonkong, the Technical Department manager.
The airline is also downsizing its fleet by more than 24 aircraft by 2016. The airline currently has 94 aircraft in its fleet, down from 102 at the end of 2014, and anticipates being down to fewer than 90 going into 2016.
It is continuing to reduce that by eliminating several older aircraft while adding a few new aircraft. It currently has 14 aircraft on order, consisting of two 787-9 and 12 A350-900s. The A350 will begin entering the fleet in June 2016, while the 787s are scheduled for delivery in 2017.
Keasmonkong noted that along with reducing the cost of operating and maintaining the older aircraft, it will allow its maintenance services to obtain increased revenue from third- party work.
Another problem facing the Technical Department is a series of bans placed on Thai airlines based on safety concerns raised by ICAO. These were primarily placed on charter flights and tended to be related to air operator certification processes. Keasmonkong said that Thai Airways has resolved this through increased inspections to ensure compliance with the standards of certifying aviation authorities.
While the May 2014 coup in Thailand put the country under a military junta and caused initial economic and political disruption, the same government has now reported brought stability back to the business environment in Thailand. This is increasing growth in an already well-established MRO hub in Southeast Asia, with Thai Airways being one of the leading providers of aviation maintenance.
Thai Airways itself was formed in 1960 by a joint venture between Thai Airways Company, a domestic air carrier, and SAS. Technical support came from SAS. In March 1977, SAS terminated its investment in Thai Airways, and in 1985 Thai Airways Technical Department (TATD) was formed to provide maintenance support for the airline.
At that time the airline was flying the A300-B4, 737, McDonnell Douglas DC-10 and 747-200. Today it has a fleet of Boeing 747-400s, 777-200s and 300s, 737-400s and 787-8s, plus the Airbus A330-300, 320-200, A340-600 and A380-800.
Keasmonkong said that the technical department is considered a profit center by the airlines, which pays for its services. However, it is all done through “internal financing.” The airline’s annual report doesn’t list its maintenance department’s revenue. But it does list costs. Maintenance and Overhaul costs for 2014 were THB 14.68 billion ($411.8 million) a 9.2 percent increase over 2013 costs of THB 13.45 billion ($377.12 million). The 2014 costs represented 6.7 percent of the total airline’s costs, compared to 6.1 percent in 2013. The 9.2 percent increase in costs was due to the estimation of return condition and overhaul expenses for expired operating lease of three 737-400s and upcoming expired leases on two 777-200 and two A330-300s.
Keasmonkong said that the older aircraft being decommissioned will done on an “as is” basis, reducing the amount needed to be spent getting them ready to return to the leasers.
The airline has maintenance centers at three airports— Suvarnabhumi International and Don Mueang International near Bangkok, and U-Tapao International at Rayong. All three provide light maintenance. Heavy C- and D-check maintenance is done at Don Mueang International and at U-Tapao.
Suvarnabhumi is the headquarters for Thai Airways maintenance. While it has three bays capable of handling the super jumbo A380 size aircraft, it currently provides light maintenance and component repair, although it does A- and C- checks for the A380. Thai Airways currently flies six A380- 800s. The maintenance facility encompasses 193,425 sq. m., with 24,300 sq. m. of hangar space, reported by the airline as “the largest hangar in Southeast Asia.” It has a maintenance apron of 26,100 sq. m. Don Muang provides maintenance up to C- and D-checks, with five hangars having six bays able to hold up to 747 size aircraft plus one bay for 737 size aircraft. It is actually the smallest of the three, with 170,000 sq. m.
The U-Tapao facility is the largest of the three, with 240,000 sq. m., although it has the fewest employees, with 491 compared to 2,040 at Suvarnabhumi and 1,791 at Don Muang. The facility consists of two bays with full support systems for 747, 777 and A330 aircraft. Its 240,000 sq. m. area includes the two bays totaling 24,000 sq. m plus 43,000 sq. m. for aircraft parking. As noted, third-party maintenance is a major part of the airline’s overall recovery program. Keasmonkong said that they are targeting the Low Cost Carriers (LLCs) as potential customers. An LLC they already have as a customer is Nok Air, a Thai airline owned 39% by Thai Airways. He noted that they have done 16 “C” checks for Nok Air 737-800s during 2015, and are scheduled to do 15 during 2016.
Other airline customers include heavy maintenance for Japan Airlines, All Nippon Airways. Air France, Siberia Airlines, MIAT Mongolian Airlines, Southern Air, and Thai Smile (a regional carrier 100 percent owned by Thai Airways), as well as doing the heavy D-checks on A300-600s for Lufthansa Technik. It does line and light maintenance for some 80 airlines at the Bangkok airports and for 44 customers at its route stations. In 2014 it provided 81,608 line maintenance operations for client customers while doing only 55,356 for its own airline.
The Royal Thai Air Force, headquartered at Don Muang International Airport, also uses TATD for its maintenance needs, primarily on its transport aircraft such as the 737 and A320.
It also does aircraft washing for six customer airlines at its Suvarnabhumi Airport facility, using a new NORDIC DINO machine designed for washing aircraft as large as the A380. The machine has a three-arm system with a stretch exceeding 11 meters to get up and over the larger aircraft.
Another source of income is APU overhauls, accounting for about 30 percent of the company’s work. They currently do “about 128 APUs a year,” and want to double that within the next two years, Keasmonkong said.
The Technical Division does outsource some of its maintenance requirements. Landing gear is sent to Singapore for repairs, and it sends the modules for its Rolls-Royce Trent 700 and 800 engines back to Rolls. However, it does do module changes and testing for the Rolls-Royce engines. It can do module disassembly and assembly for its CF6-80C2 engines, and has a test cell rated at 150,000 SHP for all three engines.
There have been reports of a possible joint collaboration agreement between Thai Airways Technical Department, Air France Industries and KLM Engineering & Maintenance, although the airline said it is currently in a “non-disclosure” period regarding that collaboration. The report also stated that the agreement would establish a joint aircraft maintenance facility, with U-Tapao Airport being considered as the facility site. Thai Airways has already signed a long-term maintenance deal with the two other maintenance organizations that covers Thai Airway’s 787 components, engine nacelles and APUs.
