The Airports of Thailand (AOT) has once again agreed to allow airlines, retailers and service providers at its six airports to delay payment of concession fees and other charges to help them weather the Covid-19 effects.
The AOT Board of Directors meeting on 29 July 2020 resolved to defer the payments which were due between February and July 2020 to 12 months from six months granted earlier. This is the third respite that AOT has extended to carriers and those conducting businesses at its six airports which have been adversely affected by the disruption of commercial flights which caused passenger numbers to plummet, AOT President Dr. Nitinai Sirismatthakarn said.
The AOT Board has also agreed to amend the terms of the contract entered with the King Power Group for conducting duty-free goods sales and other commercial activities at Suvarnabhumi Airport as a result of the delay in the completion of the Satellite 1 (SAT-1) passenger terminal caused by effects from the coronavirus outbreak.
The opening of the SAT-1, which was originally scheduled for service start-up this year, was put off as the pandemic disrupted construction and commissioning test. The SAT-1 is expected to be up and running after the completion of Operation Readiness and Airport Transfer (ORAT) in April 2022. However, the exact date of the SAT-1 inauguration at Suvarnabhumi Airport has to be consistent with the decreasing passengers while the operating cost and depreciation incurred from the use of the new terminal have to be in line with the estimated revenue as well. AOT envisages air passenger traffic through Thailand to gradually return to the 2019 level in October 2022.
AOT has quickly acted to alleviate the impacts on airlines and those conducting businesses at the early stage of the coronavirus outbreak. The AOT Board meeting on 19 February 2020 approved the guidelines to assist the business partners by only collecting fees based on certain percentage from the sales of the products. That means if the operators earn a lot from sales, AOT charges more from
them, and conversely if the operators' revenues are small, they will be charged less. And AOT does not charge a minimum guarantee. This measure is applied between 1 February 2020 and 31 March 2022, including an extension of the concession fee payment due in February-July 2020 for a period of six months from the normal payment due date as the operators have requested.
Later on 22 April 2020, the AOT Board endorsed the adjustment of fixed compensation rates and minimum compensation rates based on commercial activities after the end of the relief measures. That is, at the end of the assistance measures on 31 March 2022 AOT will collect the minimum guarantee payment by using the minimum benefit rate imposed in 2019 as a basis for calculations.
Furthermore, the AOT Board agreed to extend the assistance to airlines such as halving the landing and parking fees, discounting rental fees for buildings by 50% if the operators wish to continue
using the space. However, if there is a request to temporarily close the business, AOT does not collect the rental fees as well as allowing the business operators including airlines to postpone the fee payment for the due date for a period of six months until December 2020 as per the requests from more than 1,000 contractual parties.
King Power deal
The Covid-19 effects have prevented the King Power Group from fulfilling terms as set forth in the original contract with AOT. The unclear opening date of the SAT-1 means that King Power has been unable to coordinate with the suppliers for the imports of brand-name goods, many of which are produced and distributed seasonally, and thus require specific time line. With the SAT-1's construction situation as it stands, King Power would only be able to partially develop its retail spaces there only.
Because the King Power Group cannot fully proceed with the development of its retail spaces at Suvarnabhumi Airport's main passenger terminal and the SAT-1 facility as a result of Covid-19 effects, AOT has negotiated to amend the commencement date of the contract to be consistent with the opening of the SAT-1 for service in April 2022.
The King Power Group has been selected to operate the duty-free and managing commercial activities at Suvarnabhumi Airport which runs from 28 September 2020 to 31 March 2031,
a total period of 10 years and 6 months.
For the King Power Group, the minimum guarantee will be based on the rate of sharing per head as proposed in the bidding. However, the minimum guarantee fee will be reverted to the original agreement when the assistance measures ends in March 2022. That means the total minimum guarantee will vary in relation to the actual number of passengers.
AOT has carefully considered and come to the conclusion that the deal with King Power is the best option that is most beneficial to AOT.
Media Release No 33/2020, August 3, 2020
Corporate Communications Department, Airports of Thailand Plc
Tel: 0 2535 5240, 0 2535 5245
Fax: 0 2535 5216