December 2, 2015 / 6:29 AM / 2 years ago

Thailand orders improvements in aviation after FAA downgrade

BANGKOK (Reuters) - Thai Prime Minister Prayuth Chan-ocha on Wednesday ordered officials to improve aviation safety standards after the U.S. Federal Aviation Administration (FAA) downgraded Thailand’s safety ratings.

Thailand's Prime Minister Prayuth Chan-ocha delivers a speech during the opening session of the World Climate Change Conference 2015 (COP21) at Le Bourget, near Paris, France, November 30, 2015. REUTERS/Stephane Mahe

Shares in Thai airlines fell after the FAA said Thailand had failed to tackle shortcomings found in an audit this year in commercial aviation standards.

The lower safety rating blocks the airlines from launching or expanding in the United States and may tarnish the image of the country’s thriving tourist sector.

“I have ordered them to resolve the issue,” Prayuth told reporters, referring to industry officials.

The FAA cut Thailand’s Department of Civil Aviation (DCA) to category 2 from 1 for failing to comply with FAA standards.

It did not give details of the failures but said the rating meant the DCA was “deficient in one or more areas, such as technical expertise, trained personnel, record-keeping or inspection procedures”.

The DCA will boost its workforce as part of measures to raise performance and match international standards, the transport ministry said in a statement.

Thailand would complete a recertification process for 28 airlines flying international routes by August, which would help improve its standing in future audits, Transport Minister Arkhom Termpittayapaisith told reporters.

No Thai airline flies directly to the United States so the lower rating will have little immediate impact on operations.

“The financial impact of the FAA downgrade is small,” Deputy Prime Minister Somkid Jatusripitak said.

“But there is an impact in terms of sentiment. We do need to meet international standards.”

The benchmark SET index slipped to a two-month low as airlines declined.

Shares of national carrier Thai Airways International dropped 6.3 percent to a six-year low. Shares of Asia Aviation Pcl, a major shareholder in budget carrier Thai AirAsia, and Bangkok Airways dropped more than 3 percent each.

Thai Airways and Bangkok Airways said their businesses would not be affected by the FAA downgrade because they did not fly to the United States.

Patee Sarasin, chairman of low-cost carrier Nok Airlines, said on Tuesday the FAA decision would hurt the industry’s reputation and may lead to other countries limiting flights by Thai operators. Nok shares fell 1.5 percent.

South Korea, Japan and China had previously stopped Thai-based airlines from flying charters and new routes over safety worries raised in another international audit. Those restrictions have since been relaxed.

The Montreal-based International Civil Aviation Authority downgraded Thailand in June after finding a shortage of technical officers and certification problems in transporting hazardous goods.

The European Aviation Safety Agency is due to announce the results later in December of its audit.

Additional reporting by Viparat Jantraprap and Manunphattr Dhanananphorn; Writing by Simon Webb; Editing by Stephen Coates

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