Thailand relies on imported aviation equipment and is a net-importer of products including aircraft, parts, maintenance services, and airport/ground support equipment. U.S. aviation equipment and technology are well received by Thai buyers. Thailand’s location is at the center of Southeast Asia. This geographical advantage supported further growth in the aviation sector due to a rise in tourism prior to global travel downturns that occurred in 2020.
The commercial aviation industry is currently valued at US$2.2 billion and is expected to rise further as the number of inbound passengers and tourists visit to Thailand rebounds. Prior to the pandemic, passenger volume in Thailand was forecast to grow at an average of 5.4% per year.
Partnering with a local agent or distributor is the most effective way to enter the Thai market and reach potential Thai buyers. The agent or distributor can facilitate and expedite market entry with their extensive market knowledge and established distribution networks and relationships with key business and government officials. The Commercial Section at the U.S. Embassy in Bangkok provides a series of customized business development services to assist U.S. firms planning to enter or expand their presence in the market.
Current Market Trends and Demand
In 2019, more than 38 million tourists visited Thailand. With the increase in number of passengers; major Thai airlines expanded their networks. Moreover, passenger volume in Thailand grew at an average of 2% per year.
The influx in air passenger growth, prior to economic disruptions in 2020, meant that the Thai market became an attractive destination for commercial aircraft maintenance and aircraft manufacturing industries. Infrastructure facilities began to fall into place for Maintenance Repair and Overhaul (MRO) services, mostly operated by local and regional airlines.
While the impact of 2020’s market disruptions on the Thai tourism industry is undeniable, the attractiveness of Thailand continues as a major tourist destination. Thailand is centrally located in the heart of ASEAN which benefits both from a returning number of tourists and foreign investors. According to the leading operator at Airports of Thailand (AOT); Thailand’s tourism industry contributed to the growth in air passenger traffic. Airports managed by AOT handled 143.00 million passengers in 2019 up from 139.58 million in 2018. There were 893,533 aircraft movements (takeoffs and landings) in 2019, versus 874,999 in 2018. While air cargo movements showed a decrease to 1.444 million tons in 2019 from 1.690 million tons in 2018.
Thailand was a net-importer of aviation equipment in 2019, including aircraft, parts, maintenance services, and airport and ground support equipment. Its total aviation equipment imports were worth US$2.1 billion, with the total aviation equipment imports from the U.S. at US$705 million. Thai buyers prefer foreign aviation equipment and products, especially from the U.S. or Europe, as these are perceived to be of higher quality Foreign aircraft manufacturers are preferred suppliers due to lack of local producers. Airlines increase or replace their fleets by purchasing or leasing additional aircraft.
Furthermore, demand exists in Thailand to establish its Maintenance, Repair and Overhaul (MRO) hub in ASEAN, partly through government incentives for aircraft parts manufacturers and aircraft maintenance and repair businesses. Key MRO subsectors includes components which represent the highest share of 41% of all the spending; engine maintenance, making up 28% of the share; line maintenance, accounting for 16%; airframe heavy at 8%; and modifications at 7%.
Under the Thai government policy to develop domestic aerospace industry, Maintenance, Repair and Overhaul (MRO) services will take center stage. Thailand is a major player in regional aircraft maintenance and manufacturing industries. Infrastructure facilities are in place for aircraft repair and engine overhaul services. The major, leading airlines in the country, Thai Airways, Bangkok Airways, and Thai Lion Air have established Maintenance MRO facilities, aiming to serve their own aircraft and those of other airlines that visit Thailand. MRO activities is creating demand for aircraft parts and technical services.
Apart from MROs, aviation related business such as logistics, catering and land transport service will be developed. As a result, Thailand is expected to assume a new role as a regional hub. Thai airlines and aviation industry are open to opportunities for U.S. aircraft parts and aerospace equipment suppliers.
The Eastern Economic Corridor approved two aviation infrastructure development projects, the U-Tapao Airport and Aviation City, as well as an MRO center at the U-Tapao Airport. These projects create further demand for ground support equipment, aircraft & parts, training services for pilots and technicians, aviation safety advisory services, security equipment, and ground support vehicles.
The product demand includes airport construction equipment, ground support equipment, aircraft and parts, Maintenance Repair and Overhaul (MRO) services, research and development, human resources (particularly pilots and mechanics), aviation safety advisory, security equipment, passenger service equipment, baggage screening, and ground support vehicles.
Defense & Security 2021, Nov 2021, Bangkok, Thailand
Embassy/Consulate Location: Bangkok, Thailand
Senior Commercial Specialist