Sunday, May 17, 2009

Thailand's AoT offers airlines new incentives

Landing fees will be slashed further

Published: 14/05/2009 at 12:00 AM
Newspaper section: Business

Airports of Thailand Plc (AoT) will offer further incentives to keep airlines operating through its airports after a series of setbacks have hit air traffic demand.

A deeper and longer cut in landing fees, set to cost 450 million baht in lost revenue, heads the inducements to be confirmed by AoT's board on May 21.

At its April 23 meeting, the AoT board approved a 30% reduction in landing fees and a waiver in parking charges for 24 hours at the six AoT-operated airports, to be applied retroactively from May 1 to Dec 31 this year.

This enhances the current scheme - a 20% discount in landing fees and a 24-hour parking fee waiver from Feb 1 to Sept 30 - estimated to cost AoT 380 million baht.

"The impact on AoT from not providing relief to airlines is far worse than from us extending assistance to them," Serirat Prasutanond, the AoT president-designate, told the Bangkok Post.

More incentives are under consideration to help airlines maintain flights through Thailand, he said.

Airlines currently face declining load factors due to a spate of problems such as rioting in Bangkok last April, which resulted in two deaths and 135 injuries, and the H1N1 influenza outbreak, which has discouraged air travel at the start of the low travel season.

These problems have compounded issues such as the blockading of Bangkok's two airports by anti-government protesters and the global recession.

Airlines' cabin factors are now about 30% less than in the same period last year, said Jaiyavat Navaraj, chairman of the Airline Operators Committee (AOC), which represents more than 80 international airlines operating through Suvarnabhumi Airport.

There is no sign of traffic recovering and most airlines have begun to really see an impact from the flu outbreak on their bookings, he added.

Though airlines welcome AoT's enhanced incentives, the measures provide no guarantee that airlines will not reduce or even suspend their flights through Thailand if their operations fall short of breaking even, said Mr Jaiyavat.

While the discounts will adversely affect AoT's balance sheet this year, Mr Serirat said he would try to compensate by saving on costs such as overtime payments and utility expenditures and by putting off some planned investments. "We aim to cut our costs by 4-5%," he said.

Mr Serirat, who is currently serving as general manager of Suvarnabhumi Airport, ruled out reducing passenger service charges - commonly known as airport tax - as AoT is focused on helping airlines.

For 2009, AoT expects passengers passing through its airports to fall by about 15% from 54.4 million last year.

Passenger throughput in the first quarter of this year is already down 17.03% year-on-year to 13.71 million.

AOT shares closed yesterday on the SET at 26.50 baht, up 1.90 baht, in trade worth 289.34 million baht.

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