Bangkok's plan to become the leading hub in south-east Asia lies in ruins and Thai Airways' alliance strategy is under threat after the new government decided to shelve the building of the new US$5.2 billion airport.
The announcement in February by Thai prime minister Chavalit Yongchaiyudh further clouded the issue when he indicated that a new airport would be built but that completion could be delayed up to 10 years. The current facility at Don Muang, which is expected to reach saturation level by 2000, will be expanded to cope with traffic growth until around 2003. He hinted the site at Nong Ngu Hao could be dumped with a new airport being built instead at Bang Pu, 30km south of the city.
Analysts say the decision, and uncertainty over the new airport programme, is a serious blow to flag carrier Thai Airways International and its global alliance with Lufthansa and United Airlines. 'They were banking on a brand new facility to cement their relationship and give them a modern new hub to compete with rivals. That has now been thrown away, with the delay handing a huge marketing advantage to rivals like Singapore Airlines and Malaysia Airlines,' says a Bangkok-based analyst. Even with expansion at Don Muang it seems certain that Bangkok growth will be limited after 2003.
The decision, part of a drive to cut national debt and help boost a flagging economy, has caused uncertainty in Thai's management and sparked a row within the country's fragile coalition government, led by Chavalit's Chart Pattana party.
Deputy prime minister Montri Pongpanich, head of the Social Action Party, went so far as to allege that a 'certain senior politician' had been bribed by a neighbouring government to sabotage the airport project. That sparked a diplomatic tiff with Singapore, which poured scorn on those claims.
The controversy has also sparked complaints about meddling by the military. The air force, which runs Don Muang through its control of the Airport Authority of Thai-land (AAT), wanted to oversee the new airport. But the previous government gave control of the project to the New Bangkok International Airport (NBIA) company, a joint venture between the AAT and the Thai Finance Ministry, to weaken the military's hand.
The suspension of work on Nong Ngu Hao is seen as a victory for the air force, which now has control of US$1.9 billion in expansion funds for Don Muang, which is expected to be spent on expanding the terminal. The expansion should lift the airport's capacity from 31 million passengers a year to 40 million by 2003 and more than 50 million by 2008.
But the turnaround could damage foreign investment confidence in Thailand and the government is certain to face multi-million dollar claims for damages - the NBIA had already committed to 16 contracts for project work.
Source: Airline Business