International aviation groups criticise AoT

Business News - Thursday December 20, 2007

AVIATION / INCREASED AIRPORT CHARGES AND NEW SERVICES

International aviation groups criticise AoT

Airlines forced to pay for airport 'mistakes'

BOONSONG KOSITCHOTETHANA

Geneva _ Airlines are up in arms about plans by Airports of Thailand Plc (AoT) to raise user charges to pay for expanding Suvarnabhumi Airport and improving its flawed infrastructure.The International Airport Transport Association (IATA), which represents 240 airlines, said it was unfair to pass on the charges to carriers and passengers. ''It's negative,'' said IATA director-general Giovanni Bisignani.

''From our point of view, airlines should not pay for the mess, inefficiency and mistakes that [AoT] made,'' added Jeff Poole, director for charges, fuel and taxation at IATA. ''We are very happy to pay for cost-efficient infrastructure.''

The two senior IATA executives were responding to the Thai airport monopoly's plan to increase landing and parking fees and even passenger service charges, to cover higher costs arising at Suvarnabhumi, which opened in September 2006.

AoT also wants to raise funds to finance the estimated 67 billion baht that would be needed for Suvarnabhumi's planned phase one expansion _ construction of a mid-field terminal and a third runway, to raise the capacity to 60 million passengers a year from 45 million.

IATA has been critical of airport service charges that were increased earlier this year. The hikes included a 15% rise in landing and parking fees in April and a 40% increase in passenger service charges for international flights and the doubling of passenger charges for domestic flights to 100 baht in February.

IATA had earlier categorised AoT as one of the worst offenders, in addition to airport operators in Paris, London, Argentina and Auckland, for abusing its monopoly.

It also named Bangkok as one of three airports, together with Paris and Heathrow, contributing to the bulk of airport cost increases for IATA members. The fee hikes, as well air traffic growth, helped push AoT's operating revenues in the fiscal year to Sept 30 up by 20% to 19.5 billion baht, boosted by a 28% rise in aeronautical revenues to 2.9 billion baht.

But AoT saw its net profit for the year nose-dive 90% year-on-year to 1.09 billion baht, the lowest in five years, due mainly to the negative effects of the 155-billion-baht Suvarnabhumi Airport.

Mr Bisignani warned that further increase in charges would undermine Suvarnabhumi's bid to become a regional air hub, losing out to Singapore Changi Airport and Kuala Lumpur International Airport which impose ''reasonable'' charges.

''They have to understand that increasing charges will deter planes from arriving there (Suvarnabhumi),'' he said.

Mr Poole insisted that AoT cover the financial burdens and that the Thai government, which owns 70% of AoT, pay for the problems.

The IATA director-general pointed out that many airports have earlier this year reduced charges _ Buenos Aires with a 20% landing fee reduction, Toronto a 3.1% decrease in landing charges, and Seoul a 10% cut instead of a proposed 86% increase.

IATA called on the Thai government to revamp the inefficient structure and management of AoT to move forward.

''You've got to have world-class management running that airport, and with the freedom and authority to make changes,'' Mr Poole said.

Bangkok Post