Ambitious Strategy by AOT to Elevate Thailand as a Regional Aviation Hub
Airports of Thailand Public Company Limited (AOT) is firmly determined to transform the nation into a leading regional aviation hub, a critical strategic objective that the company is pursuing without disruption despite the ongoing government transition.
Ms. Paweena Jariyathitipong, Deputy Managing Director of Engineering and Construction for AOT, confirmed that the company’s operations and strategic projects remain unaffected by the change in Thailand’s political administration.
A detailed blueprint for this regional hub transformation has been meticulously prepared and is ready for the new administration, underscoring the urgency and necessity of the long-term plan.
The strategy involves three core missions aimed at boosting revenue and improving infrastructure.
The first, and most immediate, mission is to raise the Passenger Service Charge (PSC) to an appropriate level.
This increase is intended to generate essential revenue that can be channeled directly into developing airport facilities and enhancing overall service quality, thereby allowing AOT to compete more effectively with major foreign airports, notably Singapore Changi Airport.
AOT has already received preliminary approval from the Civil Aviation Authority of Thailand (CAAT) to increase the PSC by THB 5 per passenger for both domestic and international flights.
This change is projected to generate an additional annual revenue of THB 200-300 million.
However, finalization of this crucial process is currently on hold, pending the appointment of a new Civil Aviation Board (CAB), which is chaired by the Minister of Transport (MOT), requiring a fully constituted government before the final approval can proceed.
Key Missions: Concession Amendment and Ground Service Selection
The second mission critical to AOT’s transformation involves amending the concession contract for duty-free shops across six AOT-managed airports, while the third mission focuses on finalizing the selection of a third operator for crucial ground services at Suvarnabhumi Airport.
AOT’s second strategic mission involves renegotiating and amending the existing concession contract held by King Power for its duty-free operations across the six airports under AOT’s management.
The company has estimated that the finalization of this amended contract will be completed within this October, a move that is expected to optimize revenue generation from non-aeronautical sources.
The final key mission is the selection of a third independent operator for two critical service areas at Suvarnabhumi Airport: airplane ramps and ground support equipment, and cargo terminal services.
These two projects represent a massive total investment value of THB 67.3 billion, with the airplane ramps and ground service equipment project valued at THB 29.39 billion, and the cargo terminal service project valued at a higher THB 37.91 billion.
AOT is planning to officially announce the selection result early next week, with the formal agreement signing anticipated by next year after receiving final cabinet approval.
A source close to the matter has indicated that AOT Ground Aviation Services Company Limited (AOTGA) has emerged as the likely winner for both projects.
AOTGA is a joint venture, with AOT holding a 49% stake and SAL Group (Thailand) Company Limited (SAL) holding the controlling 51% share.
Economic Benefits and Projected Industry-Wide Growth
Bualuang Securities forecasts that AOT’s comprehensive strategy to transform Thailand into a regional aviation hub will generate an estimated THB 33 billion in new annual revenue, with a significant multiplier effect that will fundamentally transform not just infrastructure, but the entire Thai economy.
The securities firm projected that the strategy to elevate Thailand into a regional aviation hub would directly increase annual revenue by an impressive THB 33 billion.
Furthermore, Bualuang Securities identified five companies whose shares are expected to benefit significantly from this major strategic shift.
The first beneficiary is AOT itself, as the primary airport operator, gaining directly from the increased PSC, transit fees, and general airport charges.
The second is Thai Airways International PCL (THAI), which stands to gain from its planned fleet and flight routes expansion, leveraging the enhanced hub status.
Third is SKY ICT PCL (SKY), benefiting from its provision of advanced airport service technologies, including Common Use Passenger Processing Systems (CUPPS), Advance Passenger Processing System (APPS), and various digital solutions.
Fourth is TEAM Consulting Engineering and Management PCL (TEAMG), which benefits from being a consultant and designer for major airport expansion projects, such as the Suvarnabhumi Airport’s South Terminal and U-Tapao International Airport.
Finally, Triple i Logistics PCL (III) will benefit as a key logistics and transport service provider, gaining from the projected expansion of the airports’ cargo volume.
The securities company emphasized that the creation of the regional aviation hub will transform not only the nation’s physical infrastructure but also the foundational structure of the Thai economy, generating sustainable revenue streams from passenger services, cargo handling, and various supporting businesses, along with the multiplier effects of increased transit passengers, expansion of retail and restaurant businesses, and robust job creation across the entire aviation industry’s supply chain.
