Thailand moves on airport expansion

A revival in international passenger numbers, coupled with strong domestic traffic, has seen Thailand accelerate its aviation infrastructure investment programme to meet increased demand.

Thailand had faced slower travel growth in the past 18 months, as the recent civil unrest took its toll on arrivals. Total air passenger traffic in Thailand increased by 2.5% in 2014, the lowest rise in arrivals since 2010. Figures show that while domestic traffic climbed 16.1%, the increase was offset by a 5.6% decline in international arrivals. But in a mid-year turnaround, the six main airports operated by the Airports of Thailand (AoT) saw a 37.8% year-on-year jump in passenger volumes in June and a 25% increase in flights.

While a rebound in foreign passenger figures is good news for the country, higher volumes are putting greater pressure on local airports. However, upgrades to existing facilities and the construction of new ones should allow Thailand to accommodate greater numbers of travellers, with regional additions expected to alleviate some of the strain on Bangkok.

Major expansion

The government has long planned to expand passenger and cargo capacity at the main centres for air transit. Under the programme, both of the major airports serving Bangkok are earmarked for development, with passenger-handling capacity at Suvarnabhumi – Thailand’s main gateway for foreign visitors – set to be increased by one-third by 2019.

“The roadmap, set to begin in late 2016 or early 2017, is to expand capacity to 60m passengers annually with the construction of a third runway, a second terminal and expanded facilities,” Prajin Juntong, minister of transport, told OBG.

Capacity will also be boosted at Don Mueang, the capital’s second air hub, from 18.5m to 30m passengers per year, with the construction of a new terminal that is set to open in September. The airport primarily serves charter, low-cost carriers and air freight traffic, though more airlines are expected to shift to Don Mueang after the renovations are completed, helping to relieve pressure on Suvarnabhumi.

Regional focus

While Thailand’s two largest airports are the primary focus of the upgrades, investment is also being channelled into its secondary airports in a bid to strengthen regional networks, with facilities at Chiang Mai, Phuket, Hat Yai and Chiang Rai set to be overhauled.

To stay ahead of growing demands on infrastructure, authorities recently converted a Vietnam war-era military base into a civilian airport. Built in the 1960s and still under the control of the armed forces, the U-Tapao International Airport is now equipped to handle civilian traffic following an upgrade, while additions to its existing infrastructure, including new terminal buildings, will further boost its passenger-handling capacity.

U-Tapao’s location on the east coast, close to the resort area of Pattaya, makes it an ideal destination to take some of the pressure off Bangkok’s busy airports. U-Tapao will be able to accommodate 3m passengers annually, up from its current capacity of 800,000, when the new terminal opens next June.

“A committee has been set up to engage with airlines to shift to U-Tapao for routes that are well-positioned to conveniently land there, as this will greatly ease traffic from the other two major airports,” Prajin told OBG.

AoT is also looking to expand Mae Sot airport, bordering Myanmar, in anticipation of growing trade thanks to a special economic zone in the area. The Ministry of Transport announced plans in early June to channel BT298m ($8.5m) into the project, which includes acquiring additional land for the airport’s expansion, with work earmarked for completion in 2018.

Boost for construction

Decentralising arrivals away from Bangkok will bring a raft of benefits, including shorter travel time to holiday destinations and less strain on the capital’s roads and railway network.

The investment programme should also have knock-on effects for Thailand’s construction sector, which has already seen a boost in activity from higher government spending on transport, energy and utilities infrastructure.

In March the government approved an eight-year infrastructure development plan, budgeted at BT1.91trn ($54.4bn). As part of the initiative, Thailand’s cabinet approved funding for three major highway projects in mid-July, in addition to several other road and rail developments.

The fast-tracked infrastructure programme is expected to expand the order books of Thai construction companies, though more activity could also add to supply-side pressure on materials and labour, underscoring the importance of planning to avoid project delays.

Read Next:

In Thailand

Thailand takes steps to boost FDI

Tax exemptions and other incentives are set to spearhead Thailand’s efforts to boost foreign direct investment (FDI) in targeted areas of the economy.

 

In Industry

Le nouveau code minier marocain vise les investissements hors...

Un nouveau code minier, adopté l’an dernier, devrait contribuer à doper la croissance du secteur et les exportations grâce à une mise en valeur des ressources minérales sous-exploitées du...

Latest

Kuwait follows through with SME investment

With low oil prices continuing to take their toll on the Kuwaiti economy, the government is hoping investment in the small and medium-sized enterprise (SME) sector begins to pay dividends....