U-Tapao Airport Development Faces Adjustments Due to HSR Link Delays

Strategic Insights -

The U-Tapao airport development, a flagship project in Thailand's Eastern Economic Corridor (EEC), has hit a snag as the concessionaire, U-Tapao International Aviation Co. Ltd., proposes scaling back its initial investment in light of the delayed high-speed rail (HSR) link. The HSR project, managed by Asia Era One Co. Ltd., was expected to boost passenger traffic at U-Tapao, but its ongoing delay has made it challenging for the airport to proceed with its development. Despite the setbacks, the EEC Secretary-General, Chula Sukmanop, has assured that discussions with UTA are ongoing to find a solution that will allow the airport to move forward without jeopardizing the project's overall goals.

Key Takeaways:

  • The concessionaire, U-Tapao International Aviation Co. Ltd. (UTA), proposes scaling back its initial investment in the U-Tapao airport development due to the delayed HSR link.
  • The HSR link, expected to connect Don Mueang, Suvarnabhumi, and U-Tapao airports, has been delayed, affecting the U-Tapao airport development.
  • The EEC Secretary-General, Chula Sukmanop, confirmed that discussions with UTA are ongoing to adjust the contract and allow the airport to proceed with its development without amending the core concession agreement.
  • UTA plans to reduce the initial passenger terminal capacity from 6 million to 3 million passengers, aligning with current passenger volumes and lowering maintenance costs.
  • The proposed adjustment is still under negotiation, and the EEC Office is working on a comprehensive package of investment privileges for UTA and other operators developing projects within the Aviation City.
  • The package includes tax and duty benefits, such as corporate income tax exemptions for up to 15 years and a reduction of the normal corporate income tax rate for up to 10 years.
  • Italian-Thai Development Public Company Limited (ITD) has been selected as the construction contractor for the second runway of U-Tapao Airport.
  • The contract with the construction contractor and the construction supervision consultant is expected to be signed within July.
  • UTA's CEO, Puttipong Prasarttong-Osoth, confirmed that the proposal to scale back Phase 1 investment is necessary to adapt to current passenger traffic and align with the airport's ultimate plan to handle 60 million passengers within 50 years.

Statistics:

  • The EEC Secretary-General, Chula Sukmanop, has confirmed that the Notice to Proceed (NTP), a document authorizing construction to begin, has been delayed five times, with the latest target date being 15th July 2025.
  • The concession agreement was signed five years ago, and the contract stipulates that construction should commence within five years of the signing.
  • The proposed Phase 1 development would initially handle 3 million passengers, with the full Phase 1 development to be triggered once the HSR is operational and passenger numbers reach 80% of the initial capacity (around 2.4 million people).
  • The Aviation City incentives package includes tax and duty benefits, such as corporate income tax exemptions for up to 15 years and a reduction of the normal corporate income tax rate for up to 10 years.
  • The EEC Office is working on a comprehensive package of investment privileges for UTA and other operators developing projects within the Aviation City.

Sources:

  • "U-Tapao airport and Eastern Aviation City face adjustments as concessionaire proposes scaling back initial investment" (Thai News Agency via Xinhuanet)
  • Chula Sukmanop, Secretary-General of the EEC
  • Puttipong Prasarttong-Osoth, CEO of Bangkok Airways Public Company Limited
  • "U-Tapao airport's second runway to get new construction contractor" (Bangkok Post)
  • "Thai government working on investment promotion for Eastern Economic Corridor" (Thai News Agency via Xinhuanet)