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AOT offering deep discounts to airlines

BackNov 01, 2007

Airports of Thailand Plc (AoT) appears to be loosening its monopolistic practices and has begun to embrace a business-driven approach practised by several airports worldwide. The authority is adopting an incentive scheme to attract scheduled international air traffic to its four airports outside Bangkok through hefty reductions in aircraft landing fees, effective today.

The cuts, by as much as 95% of its normal fees, are essentiality aimed at luring new carriers to operate through the four airports and encouraging those already operating to step up frequencies, said officials of the majority-state-owned firm.

The ''aviation marketing incentive programme'' is applied to Chiang Mai, Chiang Rai, Phuket and Hat Yai where traffic volumes have been growing slowly.

It is also aimed at spurring tourism to those provinces where local industries have been urging AoT to help attract airlines to their locations.

The concessions do not cover AoT's two Bangkok airports, the flagship Suvarnabhumi and the 93-year-old Don Muang serving non-connecting domestic flights.

But airlines have been critical of airport service charges that were increased earlier this year, including a 15% jump in landing and parking fees and concession fees levied by AoT against ground-handling companies that are passed on to the airlines.

The International Air Transport Association (IATA) has said that the higher charges have made turnaround costs at Bangkok higher than at Kuala Lumpur International Airport and Singapore Changi Airport.

AoT's newly introduced scheme is similar to what has been practised by Kuala Lumpur International Airport (KLIA) and Singapore Changi airport in their bid to attract carriers.

Malaysia Airports Holdings Bhd (MAHB) offers new foreign airlines and existing airlines that add new destinations or frequencies to KLIA a three-year waiver on landing fees and then 75% and 50% discounts, respectively, for the next two years.

The Civil Aviation Authority of Singapore (CAAS) has introduced a similar scheme to attract traffic to Changi, under the Air Hub Development Fund. Early last year, it rolled out its second fund worth S$300 million.

AoT's landing fee discounts vary in accordance with different criteria.

  • A 95% reduction is offered for a carrier that operates more than one weekly scheduled flight through AoT airports to a new overseas destination;
  • a 75% cut for an airline that operates one weekly scheduled flight from AoT airports to a new overseas destination;
  • a 50% discount for new airlines that offer one weekly scheduled flight on routes already linked by AoT airports and overseas ports;
  • a 75% decrease for new carriers that offer more than one weekly flight on the route already established by the AoT airports and an overseas port;
  • a 50% reduction for an existing airline that increases the scheduled flight frequency by once a week on routes it is serving;
  • a 75% discount for an existing airline that boosts the scheduled flight frequency by more than once a week on a route it is operating.

The reduced fees are only applied to the incremental flights in the last two cases.

Based on the same conditions, a 30% discount is given for domestic flights.

While the discounts are given throughout the year at the Chiang Mai, Hat Yai and Chiang Rai airports, the concession is only applied for the summer flight schedule (April-October) for the Phuket airport, AoT's busiest provincial port.

The landing and parking fees for a Boeing 747-400 at AoT airports total US$1,892 based on an exchange rate of 34 baht to the dollar.

For the year to Sept 30, 2007, passengers through Chiang Mai airport increased 9.5% year-on-year to 3.37 million; Hat Yai was up 3.28% to 1.33 million; Phuket up 22.61% to 5.47 million and Chiang Rai up 2.18% to 711,662, according to AoT figures.


Source: Bangkok Post by Boonsong Kositchotethana
Thursday November 01, 2007