The Need to Align Passenger Charges with Operational Costs
The Civil Aviation Authority of Thailand (CAAT) and Airports of Thailand Public Company Limited (AOT) are collaborating on a crucial study to determine an appropriate increase for the passenger service charge (PSC). This initiative is deemed necessary because AOT’s current PSC rate, at only THB 730 per person for international flights, is significantly lower than those of major regional competitors, such as Singapore Changi Airport, which charges between THB 1,400 and THB 1,500. This disparity has resulted in AOT’s current rate no longer accurately reflecting its operational costs and is hindering the company’s ambitious airport expansion plans. AOT’s ultimate goal is to become a leading aviation hub in the region, a vision that requires substantial financial investment. The proposed increase in the PSC is a strategic move to generate the necessary revenue to fund these developments, which include service improvements and infrastructure upgrades across its six international airports, allowing Thailand to compete more effectively with its neighbors.
Awaiting Final Approval and Implementing a Unified Fee Structure
AOT and its consultant are currently conducting a detailed study to determine a new, unified PSC rate that will be applied across all six of its airports. This plan aims to create a systematic and equitable approach to revenue and expense management, despite the varying operational costs and passenger volumes at each location. The study is expected to be completed by October, after which AOT will submit its proposal to CAAT for review. The proposal will include the study’s results and a comprehensive investment plan for airport improvements. The proposal will then be forwarded to the Civil Aviation Board (CAB) for final approval. In the meantime, CAAT has already proposed an interim increase of THB 5 per person to the CAB, which could generate an additional THB 200-300 million in annual revenue for AOT. This interim increase is still pending approval, as the CAB is awaiting the appointment of a new member before it can hold its next meeting, which will be chaired by Thailand’s Minister of Transport.
Introducing Transit Fees and Diversifying Revenue Streams
In a further effort to enhance its revenue and operational capabilities, AOT is also preparing a separate proposal for CAAT to introduce transit and transfer fees for the first time. This initiative will require AOT to provide clear justifications and a comparative analysis of rates at similar international airports. The introduction of these new fees represents a strategic shift for the company, which has historically not charged for these services. In addition to these fee increases, AOT is moving forward with the selection of a third public-private partnership (PPP) operator. This new operator will be responsible for airplane ramps, ground support equipment, and cargo terminal services. An announcement regarding the selected candidate is expected in early August, with the final approval process involving the Ministry of Transport and the national cabinet. This multi-pronged approach, combining fee increases with a new partnership for ground services, underscores AOT’s commitment to modernizing its operations, increasing its revenue streams, and solidifying its position as a key player in the regional aviation landscape.
