Airports of Thailand Plc (AoT) is facing a tough question regarding how to use 1,140 rai of vacant land at Suvarnabhumi airport to head off the Treasury Department's demand for a ten-fold increase in the land use fee.
The state-owned airport authority has been forced to revise its long-delayed plan to develop a large-scale commercial complex on plot 37, a few kilometres northeast of Suvarnabhumi's passenger terminal, which is subject to a 50% levy imposed by the department.
The levy is in force because the plot falls into the department's definition of land to be used for non-aeronautical purposes rather than serving aeronautically related functions as originally intended when the state appropriated the land decades ago.
The land use fee imposed by the department, the statutory owner of state land, is just 5% for aeronautical activities.
AoT executives say the department's definition of "aeronautically related" has prompted AoT to look at other forms of development for plot 37 including building an additional cargo terminal or a terminal to serve private jets and charter flights.
An alternative development plan is not expected to come to light until early next year, when a study will be completed.
Elements of the commercial complex previously planned for plot 37 included a convention and exhibition centre, hotel, shopping centre and office building catering to aviation firms.
AoT viewed development of Plot 37 as supporting its goal of ramping up non-aeronautical revenue from 40% of total receipts to 50% in the next few years and reduce dependence on less-lucrative aeronautical revenue.
The passenger service charge (PSC) or airport tax is the main source of revenue for AoT, accounting for 45% or 13 billion baht a year.
The firm, which runs the country's six main airports including Suvarnabhumi, is requesting government approval to raise the PSC to 800 baht from 700 baht for international passengers and to 150 baht from 100 baht for domestic travellers, to take effect by year-end.
The long-sought increases, if approved by the Civil Aviation Department, would result in 2 billion baht in incremental revenue for AoT, which has already included the increase in its 2013 revenue projection.