AoT floats a new incentive scheme

Airlines serving Bangkok can gain a rebate on 2011 landing fees if they increase  traffic by a minimum of 5,000 passengers during this calendar year.

Airports of Thailand introduced the incentive, last week, in a bid to encourage airlines to increase services through Suvarnabhumi Airport. They have until 30 April to enrol in the incentive scheme.

The rebate on landing fee kicks in after an airline delivers an annual increase in passengers when compared with its 2009 performance. Minimum eligibility starts at 5,000 passengers and participating airlines must have paid all their 2010 outstanding bills with the airport to be considered.

AoT will count inbound and outbound passengers travelling on international routes, but will exclude transit passengers and crew. The count begins 1 January until 31 December of each year. At the end of the year, the authority will calculate the rebate, which will be awarded in the form of a reduction on next year’s landing fee payments.

The rebate is calculated by comparing passenger traffic year-by-year. The resulting calculation is then multiplied by 35 to give credits. The airline’s bottom-line credit will be divided by landing fees paid during the year, with a bonus factor entered into the equation.

The bonus factor is based on the percentage of the increase in passengers. For example, if the increase is less than 5% compared with the previous year, the bonus factor will be 1.05.

After the bonus factor is taken into account, the resulting percentage is taken off the next year’s landing fees.

Suvarnabhumi Airport director, Niran Theeranatsin, said that this is a long term incentive scheme, but was still a pilot project that might need fine tuning.

Also, in the initial stage, the scheme will only be applicable to Suvarnabhumi Airport. It may eventually apply to operations at regional airports.

That detail caused some consternation among airlines that serve Phuket and Chiang Mai. They argued that the calculation was too complicated and to work as an incentive it would require a serious rethink to simplify the formula, while the  benefits should be applicable to this fiscal year.

“Last year, AoT’s revenue dropped by Bt2 billion due to relief measures given to airlines and business operators at Suvarnabhumi Airport.” said Mr Niran.

“However, with this scheme, we should not suffer that kind of loss, because we will gain revenue from the passenger service charge and around15% from spending at shops in the terminal due to the airlines bringing in more passengers.

He explained: “If an airline adds an extra flight using an A320, that can carry about 150 passengers, AoT would receive around Bt105,000 from the PSC, while landing fee was only Bt21,000. The airport can still earn considerable revenue from the PSC if the airlines have  passengers. A flight that is almost empty is not good for the airline or the airport.”

In addition, the AoT board resolved, 25 February, to extend short-term relief, that expired December last year. Airlines gain a  20% discount on parking fees  and  10% on landing  fees, from March to December.

The top 10 airlines serving Suvarnabhumi have already signed off on the proposed incentive scheme. They are: Thai Airways International; Thai AirAsia; Cathay Pacific Airways; China Airlines; Emirates; Singapore Airlines; Japan Airlines; Bangkok Airways; Korean Air and EVA Air.