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Suvarnabhumi » Two-airport plan risk government’s credibility

Sunday, July 20th, 2008

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The cabinet’s decision yesterday to permanently reopen the old Don Muang airport has surprised aviation executives, who say it further undermines the government’s waning credibility in the eyes of investors.

They said the decision to operate two international airports would fuel further confusion and reflected an inconsistent state policy, heedless of the far-reaching consequences.

Splitting air traffic between Suvarnabhumi and Don Muang would create confusion not only among travellers and complicate their flights connections, but also affect authorities involved in managing air traffic, they said.

Airlines and other businesses invested tens of billions of baht setting up facilities at Suvarnabhumi in line with the previous government’s announced ”single-airport” policy for Bangkok.

Some executives even warned of legal implications including litigation and costly compensation claims against the government and Airports of Thailand Plc, the SET -listed operator.

The cabinet’s resolution represents not only a change of government policy but also a change in the terms of various concessions and contracts that operators at Suvarnabhumi entered with AOT.

”The resolution does not seem to be right, not well thought through, impractical and could be changed again soon,” said Prasert Prasarttong-Osoth, the founder and chief executive of Bangkok Airways.

The International Air Transport Association (IATA), which represents 270 airlines worldwide, said it continued to advocate one airport for Bangkok.

”For Bangkok to be a strong aviation hub in the region, the long-term vision should still be to have a single-airport operation. Two airports will split the passengers, airlines, AoT’s resources, and will lead to lower cost-efficiency and inconvenience for passengers,” said Albert Tjoeng, the IATA spokesman for Asia-Pacific.

Dr Prasert, who has been in the airline business for 40 years, agreed, saying that Bangkok needed one airport if it was to attain air-hub status of the region.

Udom Tantiprasongchai, the chief executive and founder of the budget carrier One-Two-Go and Orient Thai Airlines, warned that if carriers were given the option to return to Don Muang, as many as 90% of the 80 international airlines serving the capital would opt to exit Suvarnabhumi.

”It’s beyond question most airlines want to go back to Don Muang due to cost considerations and convenience,” Dr Prasert added.

That gives rise to the scenario that both airports would be underutilised, due to high operating costs, and that air traffic may not be large enough to meet the break-even lines for AOT and airlines that want to operate bases at both airports.

About 40 million air travellers passed through Bangkok last year. Suvarnabhumi has the capacity to handle 45 million passengers a year while Don Muang was technically capable of processing around 38 million.

As many airlines would be inclined to move back to Don Muang, Suvarnabhumi could experience a plunge in revenue from fee collections from carriers, passengers and concessionaires offering services at the new airport.

There is also question of the cost carriers and related businesses would face to re-establish themselves at Don Muang not to mention the inconvenience to thousands of workers who moved from northern Bangkok to the eastern suburbs and Samut Prakan to be closer to their new workplace.

It would cost Thai Airways alone at least 500 million baht to transfer some of its equipment back from Suvarnabhumi to the 92-year-old Don Muang airport, said an executive of the national carrier.

The cabinet reached its decision yesterday without consulting airlines or even AOT management.

Many aviation executives had supported an earlier proposal to divert all domestic flights from Suvarnabhumi to Don Muang to ease growing congestion and free up some space for repairs at the new airport.

Dr Prasert said that international flights, which constitute 70% of air traffic through Suvarnabhumi, should remain at the new airport. He also said officials should start building the third and fourth runways at Suvarnabhumi right away while also fixing existing runways, taxiways and other problems. Once the new runways and repairs are completed, all commercial flights should be go through the new airport, he suggested.

Nonetheless, IATA’s Mr Tjoeng said that given that the government had made its decision, what was important now was to have a level playing field for all airlines in Bangkok.
”Carriers should be free to choose which airport they wish to operate from. And the airport charges should be transparent, and accurately allocated.There should not be any cross-subsidisation between the two airports,” he said.

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