China, Japan, S.Korea halt Thai air route expansion on safety concerns

By Khettiya Jittapong and Manunphattr Dhanananphorn

BANGKOK (Reuters) - China has joined South Korea and Japan in stopping Thailand-based airlines from flying charters and new routes because of safety concerns highlighted by an international audit, Thai officials said on Monday.

The move will come as a blow to Thai air carriers that have just begun to recover after a poor 2014 when political protests slashed the number of tourists visiting the Southeast Asian country.

The halt is disrupting the peak travel season around the Thai New Year holiday in April. About 100 charter flights to Japan alone have been cancelled and some 30,000 tickets either refunded or modified, Somchai Piputwat, the director general of Thailand's Department of Civil Aviation (DCA), told reporters on Monday.

Budget carriers have been worst hit, Thai officials said, though national carrier Thai Airways International , which is in the midst of a major restructuring, has also been prevented from expanding because of the halt.

One aviation source with knowledge of the matter told Reuters that significant safety concerns had been uncovered during an audit of Thailand's civil aviation authority by the Montréal-based International Civil Aviation Organization.

The source said the ICAO's concerns revolved around the issue of operator certificates to carriers by the Thai authority. While the ICAO cannot "downgrade" states, its audits identify concerns that could lead countries to take steps such as banning flights.

"The audit revealed some safety concerns, primarily relating to air operator certification procedures," ICAO spokesman Anthony Philbin said in an email, adding that Thailand had submitted a plan to the ICAO to correct the issues identified.

The U.S. Federal Aviation Administration said it was aware of ICAO's safety concerns, but declined to say whether it was reviewing Thailand's aviation safety status, and referred questions to Thai authorities.

Analysts say an FAA downgrade of Thailand's aviation safety assessment would prevent Thai airlines from launching or expanding service to the United States, either directly or as code-share partners. It would also limit their choice of aircraft and increase inspections of Thai aircraft at U.S. airports.

DOMINO EFFECT

Thai Transport Minister Air Chief Marshall Prajin Juntong told reporters on Monday that Thailand had struggled for a decade to comply with ICAO standards.

While the ICAO has not made the results of the audit public, Prajin said aviation authorities in some countries had taken pre-emptive steps to stop Thai carriers from flying new routes.

Authorities in China have rejected plans by budget carrier Orient Thai Airlines and charter flight operator Sky View to operate more flights to the country, the DCA's Somchai said.

South Korea has rejected plans by charter carrier Asia Atlantic Airlines to start new flights, he added. Japan had already made a similar move, according to Thai media reports.

Other airlines affected by the ban are Thai Airways and long-haul, low-cost carrier Thai AirAsiaX.

"It's a domino effect," Prajin said, adding that the ministry hoped the issue would be resolved within eight months.

Thai Airways declined to comment. Nok Airlines said the impact on NokScoot, its joint venture with Singapore Airlines subsidiary, would be limited.

Voradech Hanprasert, deputy permanent secretary at the Thai Transport Ministry, said the ICAO findings had no impact on existing flights.

But Thailand is concerned the results could lead the FAA to put Thailand on its watch list, he said.

An ICAO representative from one Asia-Pacific country said on Monday he felt Thailand would rectify the concerns raised in the audit.

"A (country) like Thailand will definitely take measures to address these issues," he said. "I think they need time."

(Additional reporting by Allison Lampert in MONTREAL and Alwyn Scott in NEW York; writing by Simon Webb, editing by David Clarke and G Crosse)