BANGKOK -- Thailand has pushed ahead with an ambitious airport expansion in the Bangkok region despite the plunge in air traffic during the coronavirus pandemic.
The 290 billion baht ($9.4 billion) expansion of U-Tapao, dubbed the Eastern Airport City project, is part of a broader effort expected to double the total capacity of three airports around the Southeast Asian nation's capital to about 160 million passengers by 2024.
The buildup is meant to boost tourism, a sector that contributes roughly 20% of Thailand's gross domestic product. Planners envision aviation-related businesses, such as aircraft maintenance, eventually rivaling the country's auto industry.
But the coronavirus pandemic has dealt a blow to those assumptions.
Thailand has essentially halted all international flights as part of virus-related travel restrictions. While 40 million foreign travelers flew into Thailand last year -- mainly Chinese tourists -- demand is not expected to recover completely until at least 2023, according to state-run Airports of Thailand. The airports risk being stuck with excess capacity when the expansions are complete.
In a sign of the aviation industry's plight, Bangkok-based budget carrier NokScoot Airlines on Friday approved a plan to liquidate the company after just five years in business.
In April, Airbus pulled out of a joint agreement with flag carrier Thai Airways International to develop an aircraft maintenance center due to the pandemic. Thai Airways filed for bankruptcy protection the following month.
Maintenance facilities are a key part of the $9 billion project. Airport City will include an additional passenger terminal at U-Tapao airport 150 km southeast of Bangkok, a commercial plaza and a maintenance, repair and overhaul center for aircraft. The complex would be unique among Southeast Asian air hubs.
But if airlines do not expand their fleets, the maintenance center and plans to attract investment in aircraft component production would be put at risk.
A state development agency signed a 50-year operation and investment deal for Airport City on June 19 with a consortium of private interests, including Bangkok Airways.
U-Tapao airport will "be the starting point for other ongoing projects which will help Thailand to grow steadily and sustainably in the future," Bangkok Airways CEO Puttipong Prasarttong-Osoth said during the signing ceremony.
Bangkok Airways suffered a net loss of 300 million baht during the quarter ended in March, compared with a profit of 500 million baht a year earlier. Earnings have continued to go south, and the airline has lobbied for government aid.
The carrier is funding the U-Tapao work with out-of-pocket capital and credit from lenders. The airline's stock has tumbled 20% since the day of the signing ceremony, based on Monday's closing price.
The two airports closer to Bangkok, Don Mueang and Suvarnabhumi, also are undergoing expansion by their operator, Airports of Thailand.
A high-speed rail link will connect the three airports in a one-hour trip. A consortium led by Thai conglomerate Charoen Pokphand Group is building the $7 billion line. This forms a major part of the Eastern Economic Corridor development zone, the centerpiece of Prime Minister Prayuth Chan-ocha's business agenda.
Not everyone is pessimistic about the outlook for air travel.
Kanit Sangsubhan, the secretary-general of Thailand's Eastern Economic Corridor office, predicts the aviation business will return to normal in one or two years, leaving no negative impact on the project.