AOT Makes a Cut of ฿2.2bn to End the Dispute of Leasing with “State Property”

On July 25, 2019, Airports of Thailand Public Company Limited (AOT) has made an announcement referring to the leased State Property under the supervision of the Royal Thai Air Force and the Department of Aviation (presently the Department of Airports) from the Treasury Department to operate its airport business at Don Mueang International Airport (DMK) and regional airports, comprising Phuket International Airport (HKT), Chiang Mai International Airport (CNX), Hat Yai International Airport (HDY) and Mae Fah Luang- Chiang Rai International Airport (CEI).

The term of such lease is 50 years from the date of completion of the State Property lease agreement (30 September 2002). The agreement prescribed terms and conditions for State Property charges collected from AOT as follows:

1) DMK shall be charged 5% of AOT’s total revenue generated by DMK without deduction of any expenses during a given accounting period until the commercial operation of Suvarnabhumi Airport (BKK). Rate adjustments shall later be made in accordance with the study results of the consultant selected by the Treasury Department.

2) Regional airports, comprising HKT, CNX, HDY and CEI shall be charged 2% of AOT’s total revenue generated by regional airports without deduction of any expenses during a given accounting period until the commercial operation of BKK. Rate adjustments shall later be made in accordance with the study results of the consultant selected by the Treasury Department.

 

Based on such terms and conditions, the Treasury Department and AOT mutually considered and agreed to determine State Property charges at DMK and regional airports during 2017 – 2032 at the rate of 5.5% of total revenue without deduction of any expenses during a given accounting period. However, those charges shall not be less than 5.5% of revenue forecast proposed by AOT. This has caused AOT to pay a total of THB 2,447,921,494.93.

However, since AOT already paid THB 2,205,090,876.05 for State Property charges at DMK and regional airports during 2017 – 2018, AOT therefore will have to additionally pay THB 242,830,618.89. It is also expected that AOT will have to pay a total of THB 1,444,304,180 in 2019 instead of the previously forecast amount of THB 1,282,824,000.