The U-Tapao International Airport or Pattaya airport is situated about midway between Pattaya and Rayong in Thailand, being roughly 40 km from each city. Situated away from the main terminal which services scheduled and charter flights, U-Tapao airport is also a Royal Thai Navy Air Station and home of the Navy’s First Air Wing. The airport is connected to about 24 cities, including all 10 ASEAN countries. The Thai government is now pushing ahead with the U-Tapao airport expansion plan, despite the plunge in air traffic during the Covid-19 pandemic. The THB 290 billion ($9.4 billion) project is part of a broader effort expected to double the total capacity of three airports around the country’s capital, Bangkok, by 2024. The project is one of the infrastructure centrepieces for Thailand’s Eastern Economic Corridor (EEC), a THB 1.7 trillion plan to build infrastructure and develop advanced industries along the eastern seaboard.
U-Tapao Airport and Eastern Airport City project
In June 2020, Thailand’s cabinet approved the selection of the BBS joint venture (JV) for the public-private partnership (PPP) under the U-Tapao International Airport Project, which includes an airport city, as well as the delegation of authority to the EEC Office of Thailand to enter into an agreement with the private party. The BBS JV consists of Bangkok Airways (45 per cent stake), BTS Group Holdings (35 per cent stake) and the Sino-Thai Engineering and Construction Company (20 per cent stake). The consortium is led by BTS Group Holdings with a registered capital of THB 4.5 billion.
Soon after, the PPP agreement had been signed between the Eastern Economic Corridor Office of Thailand and U-Tapao International Aviation Company Limited (BBS joint venture) for the U-Tapao International Airport and Eastern Airport City projects. The THB 290 billion project is a major infrastructure project to upgrade U-Tapao airport to become the third international commercial airport of Bangkok, linked with the Don Mueang International Airport and Suvarnabhumi International Airport via high speed train. The aviation city is expected to cover a 30 km area surrounding the airport from Pattaya to Rayong. While the Don Mueang and Suvarnabhumi airports are also undergoing expansion by their operator, Airports of Thailand, a consortium led by Thai conglomerate Charoen Pokphand Group is building the $7 billion high speed rail line connecting the two airports with U-Tapao airport.
Key project components
The BBS joint venture has formed U-Tapao International Aviation Company Limited to implement the project, which is divided into four phases. Phase I includes a passenger terminal building of 157,000 square metres, commercial area, parking facilities, a ground transportation centre, and 60 aircraft stands. The phase is scheduled to be completed in 2024 to boost annual passenger capacity to 15.9 million. Phase II includes a passenger terminal building of 107,000 square metres, with automated people mover (APM) and automated walkways and 16 additional aircraft stands. Phase II, which is expected to boost the passenger capacity to 30 million, is expected to be completed by 2030. Phase III includes another passenger terminal of 107,000 square metres, with an additional APM and 34 aircraft stands. It is expected to be completed by 2042, boosting the airport’s capacity to 60 million passengers per year. Meanwhile, construction of the 3.5 km second runway is being undertaken by the Royal Thai Navy, with 2024 as the scheduled completion date.
The government will invest THB 20 billion to construct the second runway and control tower to handle up to 70 flights per hour, while BBS will invest THB 270 billion for the construction of the third passenger terminal, APM, logistics and cargo complex, free trade zone and a commercial centre with a capacity of 3 million tonnes per year. Other supporting facilities include maintenance, repair and overhaul (MRO), an aviation training centre, an electricity power plant, a tap water production plant, a wastewater treatment plant, and aviation fuel services. Moreover, the project also has a commercial gateway of 400,000 square metres, which includes a duty-free area, a shopping arcade, restaurants, hotels as well as business park and airport city covering 1 million square metres of shopping and exhibition centres, and office buildings.
Impact of Covid-19 pandemic on the project
Thailand has essentially halted all international flights amid the Covid-19 related travel restrictions. While 40 million foreign travellers flew into Thailand last year – mainly Chinese tourists – demand is not expected to recover completely until at least 2023, according to state-run Airports of Thailand. The airports risk being stuck with excess capacity when the expansions are complete.
The pandemic is also likely to lead to funding problems for the project. Bangkok Airways, a major stakeholder in the U-Tapao project, suffered a net loss of about THB 300 million during the quarter ended March 2020, compared to a profit of THB 500 million in the year-ago period. Earnings have continued to go south, and the airline has lobbied for government aid. As a result, the carrier is currently funding the U-Tapao work with out-of-pocket capital and credit from lenders.
Besides, in April 2020, Airbus pulled out of a THB 11 billion joint agreement with flag carrier Thai Airways International to develop the MRO facility at U-Tapao airport, owing to the Covid-19 pandemic. Further, Thai Airways filed for bankruptcy protection the following month. The government has targeted the completion of U-Tapao’s MRO facility by 2022-23. However, if Thai Airways pulls out of the project, the MRO area will have to be returned to the navy for construction of the Eastern Airport City, in line with the EEC development plan.
Summing up
One of five mega-infrastructure projects in the government’s flagship EEC scheme, the U-Tapao airport development in Rayong will link with Bangkok’s Don Mueang and Suvarnabhumi airports via high speed trains to handle up to 200 million passengers annually. The project will create a hub for tourism, logistics and aviation in the EEC, while the Eastern Aerotropolis between Rayong and Pattaya will revitalise the eastern seaboard, connecting with Bangkok through sea, road, rail and air, making Thailand an aviation hub and gateway to Asia. The project is also expected to generate more than THB 62 billion in tax revenue and 15,600 jobs per year for the first five years. Since the project is of key importance for infrastructure development in the country, its timely completion needs to be ensured. However, the Covid-19 pandemic, which has severely affected the aviation industry across the globe, might have an impact on the project’s timelines as well. The government will have to provide adequate support to the private players engaged in the different components of the U-Tapao and Eastern Airport City project to ensure timely and successful implementation of the project.
