U-Tapao Airport Expansion Hits Turbulence as Phase 1 Investment Scale Reviewed

 

The ambitious development of U-Tapao Airport and the Eastern Aviation City faces significant adjustments as the concessionaire, U-Tapao International Aviation Co. Ltd. (UTA), proposes scaling back its initial investment.

 

This move comes as the much-anticipated high-speed rail (HSR) link connecting three major airports – Don Mueang, Suvarnabhumi, and U-Tapao – continues to be delayed.

 

The protracted hold-up of the HSR project, managed by Asia Era One Co. Ltd. (C.P.), has directly impacted the U-Tapao airport development.

 

To date, the Eastern Economic Corridor Office (EEC) has been unable to issue the vital Notice to Proceed (NTP) – the official document authorising construction to begin – to UTA, despite five years having passed since the concession agreement was signed.

 

While UTA has publicly indicated its readiness to move ahead without waiting for the HSR, ongoing negotiations between UTA and the EEC about the terms for proceeding in the HSR's absence remain unresolved.

 

This impasse has led to repeated postponements of the NTP, which was most recently targeted for issue on 15th July 2025. The deadline has now been extended yet again, despite the contract stipulating that construction should commence within five years of the signing.

 

Chula Sukmanop, Secretary-General of the EEC, confirmed that discussions with UTA on the assumption of no immediate HSR link are still ongoing, primarily due to issues with the three-airport HSR project itself.

 

The EEC is currently negotiating with the private sector to adjust the contract. Chula clarified that the aim is to allow UTA to proceed with its investment without needing to amend the core concession agreement, as additional clauses can be added.

 

 

 

 

 

The existing investment privileges for the project, he added, would remain unchanged.

 

Previously, the U-Tapao Airport and Eastern Aviation City development plan had already been revised from four to six phases. However, in light of the HSR's absence, UTA has now proposed a further adjustment to the Phase 1 investment.

 

The aim is to better align with current passenger volumes, such as reducing the initial passenger terminal capacity from the previously negotiated 6 million passengers to 3 million.

 

This would also help lower maintenance costs. Full Phase 1 development would then only proceed once the HSR is operational and passenger numbers reach 80% of the initial capacity (around 2.4 million people), triggering subsequent development phases to ultimately accommodate 60 million passengers.

 

This proposal is an additional point still under negotiation. Without the HSR link, projected passenger numbers are unlikely to be met.

 

Conversely, developing the airport on too small a scale could fail to attract airlines and passengers. Therefore, a multifaceted approach is required for the U-Tapao Airport and Eastern Aviation City project.

 

Beyond the passenger terminal, the private sector's investment also includes the broader Aviation City, featuring related businesses, all designed to elevate U-Tapao Airport into another key air transport hub for Bangkok.

 

 

 

 

Aviation City Incentives and Runway Progress

In parallel, the EEC Office has prepared a comprehensive package of investment privileges for UTA and other operators developing projects within the Aviation City.

 

These incentives are designed to facilitate business operations and include significant tax and duty benefits. Operators can apply for corporate income tax exemptions for up to 15 years, and a reduction of up to 50% of the normal corporate income tax rate for a maximum of 10 years.

 

Furthermore, they will qualify for exemptions or reductions from customs law compliance, mirroring benefits offered to businesses in free zones, bonded warehouses, or free trade zones. Rights for foreign nationals to enter, reside in Thailand, and obtain work permits are also part of the package.

 

"While these tax and investment promotion benefits are currently awaiting the Ministry of Finance to issue the necessary laws for the EEC to implement them, UTA can already use these proposed incentives in its roadshows to attract investors and submit preliminary applications," Chula explained. "The EEC will assess these as a comprehensive package for the Aviation City, as well as considering individual enterprises that may qualify for additional benefits."

 

Chula also provided an update on the construction of U-Tapao Airport's second runway.

 

The Royal Thai Navy has finalised the tender results for Runway 2 and its taxiways, with Italian-Thai Development Public Company Limited (ITD) having been selected.

 

This development has already received Cabinet approval. It is anticipated that the contract with the construction contractor and the construction supervision consultant will be signed within July.

 

Puttipong Prasarttong-Osoth, CEO of Bangkok Airways Public Company Limited, a shareholder in UTA, confirmed the proposal to scale back Phase 1 investment to 3 million passengers.

 

He cited the absence of the three-airport HSR link, the full-phase expansion of Suvarnabhumi Airport, and the impact of COVID-19 as factors influencing passenger growth and necessitating the adjustment.

 

"We need to adapt our investment to suit current passenger traffic. For the first phase, we are looking at an initial investment to handle 3 million passengers, which the EEC has acknowledged," Puttipong said. "We expect construction to begin next year and proceed incrementally, aligning with the ultimate plan to enable U-Tapao Airport to handle 60 million passengers within 50 years. An underground tunnel will also be built within the airport to accommodate the future high-speed rail connection as planned."