The future of the U-Tapao Airport and Eastern Aviation City project has been thrown into doubt as political instability stalls the approval process.
U-Tapao International Aviation Co. Ltd. (UTA), the consortium behind the development, has formally requested a one-month extension from the Eastern Economic Corridor (EEC) board to revise its investment plan.
At the same time, the group has warned it may terminate its contract with the government and seek reimbursement of more than 4 billion baht.
Puttipong Prasarttong-Osoth, President of Bangkok Airways and a key shareholder in UTA, revealed on Monday, September 1, that management and shareholders convened a meeting to assess the project’s situation.
The meeting came amid Thailand’s ongoing political transition, which has left the timeline for Cabinet consideration of the project uncertain.
Puttipong noted that political uncertainty has delayed the EEC’s submission of the development proposal to the Cabinet, adding that the matter cannot move forward until a new government is fully in place
UTA has previously sought to renegotiate the scope of the project to match present-day passenger demand and expected long-term growth.
Puttipong is now urging that the EEC be given one month to allow the new Cabinet to be formed, after which the plan can be tabled for Cabinet approval. If endorsed, he said, development of U-Tapao Airport could finally move forward.
However, the consortium has also made it clear that if the Cabinet refuses to approve the proposed adjustments, it will cancel the contract altogether.
UTA argues that the government has failed to meet its contractual obligations and insists that the EEC should return over 4 billion baht already invested in the project.
Despite repeated delays, UTA has so far accommodated government requests. The EEC has extended the Notice to Proceed (NTP) three times, and the consortium has continued to comply, stressing the project’s importance to Thailand’s economic and aviation sectors.
Key Issues in Negotiations
Central to the dispute is the condition linking the U-Tapao development to the high-speed rail project connecting Don Mueang, Suvarnabhumi, and U-Tapao airports. UTA has argued that the airport should not be held back by delays in the rail link, urging the government to decouple the two projects.
In addition, UTA has raised several concerns over private-sector participation. These include requests for clearer tax incentives, simplified work permit procedures, and the ability for restaurants and beverage outlets at the airport to sell alcohol.
Another sticking point is the project’s terminal capacity. UTA has called for adjustments to reflect post-COVID-19 travel patterns, especially as Airports of Thailand (AOT) has already completed a major expansion of Suvarnabhumi Airport.
Under the original master plan, U-Tapao’s first-phase terminal was designed to accommodate 12 million passengers annually. UTA has since revised that figure down to 3 million passengers, citing drastically lower demand in the aftermath of the pandemic.
Future expansions would be phased in line with passenger growth, with the long-term goal of handling up to 60 million passengers within the 50-year contract period.
Currently, U-Tapao Airport serves around 400,000 passengers per year. Its existing terminal has a capacity of 2 million passengers, leaving the 12-million target unrealistic for the near term.
UTA argued that building such a large terminal immediately would lead to inefficiency and wasted investment.
The company has therefore proposed beginning with a scaled-down terminal for 3 million passengers, with expansions triggered by actual traffic growth.
“Post-COVID-19, the current terminal at U-Tapao is serving around 400,000 passengers, which is far below the proposed 12-million-passenger capacity,” UTA said.
“Building such a large terminal right away would result in an inefficient investment. We propose adjusting the initial phase to accommodate 3 million passengers and expanding as demand grows.”
