By Pracha Hariraksapitak
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.
Shares in Thai airlines fell on Wednesday 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 (officials) to resolve the issue," Prayuth told reporters, without elaborating on what would be done.
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 detail 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".
None of the kingdom's airlines currently fly directly to the United States so the lower rating will have little immediate impact on their 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."
Shares of national carrier Thai Airways International dropped 3.45 percent by 0448 GMT. Shares of Asia Aviation Pcl dropped 2.15 percent, while Bangkok Airways fell 0.88 percent.
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 were flat on Wednesday.
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, a division of the United Nations, 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 own audit.
(Additional reporting by Viparat Jantraprap and Manunphattr Dhanananphorn; Writing by Simon Webb; Editing by Stephen Coates)