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Suvarnabhumi » Non-aviation services could make more revenue for AoT

Sunday, July 20th, 2008

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Airports of Thailand Plc (AoT) is aiming to sharply increase its revenue from non-aeronautical sources, which could overtake contributions from its current main money-spinners aircraft landing and parking fees.

The operator of Thailand’s six international airports is working to raise the percentage of non-aeronautical revenue from 40% at present to 50% in the next fiscal year, and to 60% of its total in three to four years.

Instrumental to the strategic change will be revenue from Suvarnabhumi Airport where charges such as space rentals, service charges, concession fees and profit sharing have been the subject of criticism from airlines, retailers and other tenants.

The planned establishment of a dedicated terminal to serve low-cost carriers at the new airport in the next 16-18 months would also augment AoT’s non-aeronautical revenue.

”We expect a substantial increase in F&B (food and beverage) sales as significantly more passengers pass through the budget and main terminals of Suvarnabhumi Airport, and that will make a fair contribution to AoT’s non-aeronautical revenue expectations,” said AoT president Chotisak Asapaviriya.

In the first nine months of its fiscal year to June 30, AoT’s revenues totalled 12.24 billion baht, 63% or 7.23 billion baht of which came from aeronautical sources and 36% or 4.51 billion from non-aeronautical revenue.

In the longer term, AoT will rely much more on non-aeronautical income sources as it intends to maximises the benefits from the space at Suvarnabhumi and other passenger-related services.

The strategy is reflected in the company’s move to set aside every possible space at Suvarnabhumi’s main terminal, which boasts usable space of 563,000 square metres, for commercial areas such as shops and cafes.

AoT has granted a concession to King Power, the Thai-owned duty-free shop operator, to manage 20,000 square metres of retail space, with the commitment to provide at least 1.34 billion baht a year.

King Power is sub-leasing part of the space to retailers, while using the rest for its duty-free shops and establishments including spas, business centres and karaoke bars.

AoT, 70% owned by the Finance Ministry, expects its revenue for the next fiscal year to rise by at least 40%, mainly as a result of the opening of the new airport, which would contribute roughly 90% of overall income, according to Mr Chotisak.

Siam City Securities predicted that AoT would have revenue of 22.96 billion baht with net profit of 4.47 billion baht in the 2007 calendar year, and 25.08 billion baht in revenue with net profit of 5.37 billion in 2008.

AoT’s revenue in the nine months to June 2006 was 10.42% higher than in the same period the previous year, while net profit rose 74.7% to 9.12 billion baht.

AOT shares closed yesterday on the SET at 58 baht, up one baht, in trade worth 86.3 million baht.

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