Shares in Thai airlines moved sharply higher on Monday after the prime minister and the Civil Aviation Authority of Thailand said the UN International Civil Aviation Organization has removed a red flag against Thailand over safety concerns.
Prime Minister Prayut Chan-o-cha said at Government House that Arun Mishra, Asia and Pacific director of the ICAO, met him on Monday and confirmed that the ICAO had reached an official resolution to lift the red flag on Thailand.
The ICAO placed its red flag on June 18, 2015, he said, and raised 33 significant safety concerns after checking aviation safety standards in Thailand in January that year.
Gen Prayut said his government had “systematically and concretely” solved long-standing problems concerning aviation safety standards.
Among the measures taken, he said, air operator certificates of 28 locally registered airlines operating international flights were reviewed, aviation laws were amended and the number of qualified aviation-related personnel was increased.
Thailand was downgraded in June 2015 after missing a deadline to resolve significant safety concerns, meaning that airlines in Thailand were unable to add further routes, though they could continue to operate routine flights.
The government sought the ICAO's reassessment on June 30 and its representatives conducted the inspection Sept 20-27, ending with the removal of the red flag, Gen Prayut said.
In a statement on its website, the Civil Aviation Authority of Thailand said, "Although lifting the red flag is a significant turning point for her aviation industry, Thailand and CAAT need to carry on their missions to improve the aviation safety standards."
CAAT director-general Chula Sukmanop told a news conference the removal of the red flag would give Thai airlines a chance to start new flights to China, Japan and South Korea.
Shares in Thai Airways climbed nearly 8% on the news before falling back to trade at over 5% higher. Shares in Asia Aviation, which operates Thai Air Asia, rose as much as 5% and later traded up nearly 4%. Shares in airport operator Airports of Thailand rose over 2%.
The biggest beneficiaries of the decision would be smaller carriers, such as Thai AirAsia X, NokScoot and Thai Lion, said Corrine Png, the CEO of Singapore-based transport research firm Crucial Perspective.
"The ICAO downgrade had seriously impeded these new entrants’ growth to lucrative markets such as Japan and South Korea," she said. "These airlines can now grow more aggressively. This would, however, imply increased competition for Thai Airways when they expand."
Mr Chula said he expected Thailand would regain a Category One status from the US Department of Transportation’s Federal Aviation Administration (FAA), which also downgraded Thailand in 2015. The FAA downgrade meant Thai carriers could not start new routes to the United States.
The CAAT said its aim was to be at "the world's forefront" in safety and reach the global average in each safety category. Actions were still needed to address findings of an ICAO inspection in January 2015 and an audit in July, it said.
ICAO's red flag was based on its audit of the regulatory body, rather than individual airlines. Some major Thai airlines, including Thai Airways, Bangkok Airways, Thai Lion and NokScoot, have passed the International Air Transport Association Operational Safety Audit, a benchmark for global safety management in airlines.
Aviation safety is particularly important for Thailand given that tourism accounts for around 12% of its economy.
The countries which still have red flags against them are Djibouti, Eritrea, Haiti, Kyrgyzstan and Malawi, according to the ICAO list.
Earlier story: ICAO set to lift aviation red flag
(CAAT website)