The redesign will shorten the distance that planes must taxi to the budget terminal.

President Chotisak Asapaviriya said on Thursday that the additional space would bring the total area of Suvarnabhumi Airport's budget terminal to 40,000 square metres.

Demand for travel on budget carriers has doubled in the last year in Bangkok and expanded 40 per cent upcountry. The extra space at the new airport is necessary to meet the rising demand.

Chotisak said having a terminal dedicated to low-cost carriers would also shorten the time it took for planes to land, taxi and park, thereby cutting expenses, particularly fuel costs.

Chotisak said that as a result, the airlines would save time, and AOT would benefit from a faster turnover of flights at the budget terminal, adding that AOT might cut landing and parking fees for high-performing airlines in the future.

"Carriers want more space. We're expanding the terminal and designing it especially to facilitate them, including 10,000 square metres of storage rooms," he said.

The reorganisation, which was approved by the company's board of directors on Wednesday, will cost more than Bt100 million above the Bt800 million that has already been spent on the budget terminal.

But Chotisak insisted the additional expenditure would not affect AOT's cash flow, because its earnings before interest, depreciation and amortisation have been strong.

In June, AOT posted a net profit of Bt9.12 billion for the first nine months of the current fiscal year. The return on assets and return on equity was 9.96 per cent and 17.04 per cent, respectively.

AirAsia and Jetstar showed interest in increasing the number of their flights from the new airport after AOT informed all of the low-cost airlines, including One Two Go and Nok Air, of the new airport's advantages.

Chotisak said AirAsia would add at least 10 more flights to its routes, including three more a week on the Kuala Lumpur-Hat Yai route and an additional one on its Singapore-Phuket route. AOT has also encouraged the low-cost airline to add an extra Chiang Rai flight.

Jetstar reportedly wants to cooperate with AOT in launching promotions on their Phuket, Chiang Mai and Chiang Rai routes.

Chotisak said he expected domestic and international flights by both budget and high-cost airlines to increase by 100 flights once Suvarnabhumi Airport opens.

AOT plans to increase its foreign-currency revenues in the future, the better to finance its external debts. Chotisak said airlines might therefore be required to pay AOT in foreign currency.

He added that AOT's performance was expected to improve in the third quarter, as tourism recovered, particularly in Phuket.

The company also plans to cooperate more closely with the Tourism Authority of Thailand in launching more campaigns to attract tourists.

Following AOT's good results for the first nine months, Phatra Securities Plc revised its core-profit forecast upwards by 13.8 per cent for the entire 2006 fiscal year and increased its 12-month price objective to Bt72 per share, from Bt67 before.

The key consideration in the new estimates is higher passenger growth.

"While we've turned more conservative in regard to operating costs, management's decision to hedge its yen loan fully has increased our interest-expense forecast. However, it should materially lower the company's earnings volatility," Phatra Securities said in a recent report.

Anoma Srisukkasem

The Nation