Fly deadbeat air: Thai airlines gaming system, cheating leasers

Regulators may step & revoke airplane usage rights for airlines not paying leasing companies but will they seize aircraft if airlines defiant?

AIRLINE INDUSTRY

Fly deadbeat airlines: Thai airlines gaming system & cheating leasers

2/03/2017
Amornrat Mahitthirook

Some Thai registered airlines are intentionally not paying for the planes they use in their business as part of a business strategy aimed at gaming the legal system.

The Civil Aviation Authority of Thailand (CAAT) is considering revoking the airplane usage rights of these airlines because it risks further tarnishing the image of Thailand's airline industry.

GAMING THE LEGAL SYTEM

Most Thai registered airlines (carriers) rely on leasing services.

Airlines' failure to pay lease fees has been a problem over the past five years.

Court proceedings in Thailand have not been able to perform their legal function to help leasing companies to enforce leasing contracts and reclaim their planes when their customers break the terms of lease contracts.

Lengthy court proceedings between the leasing companies and troubled airlines allow some unscrupulous airlines to take advantage of the judicial proceedings to extend the time they use the planes -- without paying the lease fees -- before a ruling is handed down,

This is according to CAAT director Chula Sukmanop.

However, he refused to name (and thus shame) any airlines.

The country, however, will suffer an image problem if its legal system is seen as not functioning properly and not providing adequate enforcement of contracts, something that is essential for business to thrive in an economy.

LEGAL SHORT CUT: REGULATOR TO REVOKE PERMIT

To solve these problems, the civil aviation authority (CAAT) will consider revoking aircraft usage rights without waiting until the cases are settled in court, Mr. Chula said.

However, both the troubled airlines and the leasing companies will be first invited by the department to clarify their disputes.

If it is found the airlines have failed to pay the lease fees, the CAAT will revoke the usage of the aircraft.

He didn't say how the measure would be carried out, and whether it could extend to the authorities temporarily seizing the aircraft.

MAKING UP FOR LEGAL SYSTEM SHORTCOMINGS: RESTORING BUSINESS CONFIDENCE

The measure will help ease the concerns of the leasing companies, Mr Chula said.

Insisting on the department's commitment to "restoring Thai aviation's image and maintaining the trust of leasing companies".

If the CAAT does nothing, the companies may be discouraged from leasing their planes to Thai-registered airlines or charge higher lease fees, he said.

It is hoped the measure will help prevent further problems concerning aircraft safety.

FAILURE TO PAY LEASE FEES ALSO A SIGN OF SAFETY ISSUES

If an airline cannot pay the lease fees agreed in the contracts, some might conclude it is suffering liquidity problems, Mr Chula said.

Planes must be maintained constantly to ensure passenger safety, Mr Chula said.

It would become a grave concern if an airline does not have enough money for maintenance, he said.

SIMILAR THINGS HAPPENING IN LESS VISIBLE SECTORS OF THE ECONOMY

The question arises of whether similar such gaming of a slow inefficient legal system unable to protect rights is happening in other sectors of the economy.

Individual foreign tourists are a lot less wealthy and powerful but have also suffered and have had their rights attenuated under untransparent land scams perpetuated under the cover of defamation suits in Phuket's tourism economy (see recent article here).

http://www.bangkokpost.com/business/tourism-and-transport/1207229/failed-plane-lease-deals-worry-caat

http://www.bangkokpost.com/learning/advanced/1203664/bbc-reporter-5-years-jail-for-thailand-reporting-lawsuit

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