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THAI Sees Potential in Airport Services

Posted on: Wednesday, 4 January 2006, 12:00 CST

By Boonsong Kositchotethana, Bangkok Post, Thailand

Jan. 4--As Thai Airways International embarks on a 10-year contract to manage Shah Amanat International Airport in Bangladesh in February, it is also pursuing opportunities to manage some of Thailand's regional airports.

THAI is keen to run provincial airports in Krabi, Surat Thani and Chumphon, which are currently operated by the Department of Civil Aviation and provincial administrative organisations.

It also aims to run small and medium-sized airports in Nepal, Bhutan, Burma, India, the Philippines and Indonesia.

Poonsak Chumchuay, director of the special project management department, said the plan was part of a strategy to develop a new business line to build on the airline's long-running strengths in providing various services such as passenger and ground support.

The activities will be run by THAI Airport Management Co, a new subsidiary with registered capital of 100 million baht.

"We will start off off by being the provider of airport-management service and, if opportunities arise, we could become a part owner in those airports," Mr Poonsak said.

THAI is following the trend of several major international airlines such as Germany's Lufthansa, which have been diversifying into running and owning airports to create an integrated aerospace business structure, rather than relying merely on passenger and cargo operations, which offer low yields and face fierce competition.

Lufthansa last October paid 170 million to acquire a 4.95 percent stake in Fraport AG, the operator of the Frankfurt airport. The company also has a stake in Munich's Terminal 2.

Ownership makes it possible to influence airport development, improve co-operation and enhance quality for the benefit of customers, strengthening an airline's competitive position.

Competition in the industry is no longer simply among airlines and alliances but involves air-traffic systems in their entirety, encompassing airlines, airports and air-traffic control, Lufthansa chief executive Wolfgang Mayrhuber said.

THAI intends to use Shah Amanat in Chittagong as a role model for future airport-management ventures.

Mr Poonsak said the Shah Amanat contract, which will earn THAI US$9.06 million in fees, calls for the airline to handle passenger services, ground equipment, cargo and catering services.

It will operate, maintain and manage the terminal building, ramp and cargo handling, security, building and preventive maintenance.

As well, THAI will be responsible for collecting landing and security fees, embarkation and ground handling fees.

In 2004, Shah Amanat handled 2,400 flights, processing 430,000 passengers and 3,200 tonnes of cargo.

The Department of Civil Aviation's invitation for a third party to run provincial airports would give THAI the opportunity to develop its domestic airport- management business, Mr Poonsak noted.

THAI's revenue for the fiscal year that ended on Sept 30, 2005 was 162 billion baht with a net profit of 6.77 billion baht, a drop of 3.3 billion baht or 32.7 percent from the previous year, due primarily to higher fuel costs.

The company aims to increase its revenue in the current fiscal year to 180 billion baht.

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Copyright (c) 2006, Bangkok Post, Thailand

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Source: Bangkok Post

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