The Covid-19 pandemic delivered a major blow to Airports of Thailand (AOT), the country’s largest airport operator overseeing six major hubs including Suvarnabhumi, Don Mueang, Phuket, and Chiang Mai. At the height of the crisis, international arrivals collapsed, putting unprecedented strain on the company’s finances. In the aftermath, a sluggish global recovery and further economic setbacks have held back a full rebound in international traffic. Amid these challenges and with urgent capital needs for expanding its terminal in Bangkok, AOT is poised for a pivotal turnaround. A recent increase in Passenger Service Charges—exceeding market expectations—now offers a crucial lifeline, potentially reshaping the company’s financial trajectory and reinvigorating investor sentiment.
Airports of Thailand Public Company Limited (SET: AOT) announced a significant revision in its duty-free concession arrangement following negotiations with King Power Duty Free, aiming to adapt to evolving market conditions.
Following a comprehensive review, AOT’s Board of Directors resolved to amend its concession contract with King Power rather than terminate the agreement for a new tender process. The company believes these new terms strike a better balance under present circumstances, while the market anticipates a short-term reduction in income from its duty-free operations after the adjustment. Management, however, considers this approach preferable to the risks and uncertainties associated with securing a new concessionaire.
In a related development, the Civil Aviation Board of Thailand (CAB), chaired by Deputy Prime Minister and Minister of Transport Pipat Ratchakitprakarn, approved an increase in the Passenger Service Charge (PSC) for international outbound travelers. The PSC will rise from 730 baht to 1,120 baht per person across Suvarnabhumi, Don Mueang, Phuket, Chiang Mai, Mae Fah Luang–Chiang Rai, and Hat Yai airports—facilities all managed by AOT. This adjustment is expected to be implemented within four months of the Minister of Transport’s approval.
AOT expects this revised structure to significantly bolster its financial position, projecting that the PSC increase will drive an extra 10 billion baht in annual revenue, with approximately 35 million international outbound passengers passing through its airports each year.
Analysts had suggested that changes to the PSC would influence AOT’s target share price. According to Krungsri Securities, every 100 baht adjustment in international PSC could translate to a 3.25-baht upside in AOT’s share price; thus, the 390 baht increase could provide a roughly 12.68-baht uplift.
Bualuang Securities previously estimated that a 300-baht PSC hike for international passengers would strengthen profit by 3-5%. Taking into account both the concession adjustments and PSC changes, Bualuang forecasts a potential 10% boost in profit, revising AOT’s target price from 47 to 52 baht and maintaining a “Buy” recommendation.
The share price of AOT settled 5% higher today at THB47.50 per share in anticipation of this announcement. Despite today’s surge, a higher-than-expected PSC that overshadows duty-free contract amendment could lead to performance revisions by brokerages tomorrow.
