GMR Infra ties up with AirAsia arm to bid for U-Tapao airport in Thailand

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GMR Infra ties up with AirAsia arm to bid for U-Tapao airport in Thailand

The company is also interested in taking up an airport expansion project in Indonesia.

27 September 2019

GMR Infra has tied up with low-fare carrier Thai AirAsia as part of a consortium to bid for the $2 billion expansion project of the U-Tapao airport in Thailand, one of the cornerstones in the country’s plan to become an important trade hub, said people aware of the development.

The conglomerate has also shown an interest in an expansion project for the Batam airport in Indonesia, they said.

The first-of-its-kind tieup for GMR highlights its increasing focus on its profitable airport business–especially on international projects–as it aims to demerge it from the rest of the segments and list it as a separate entity, a move seen unlocking value for shareholders.

For the U-Tapao airport, GMR is part of a consortium that also includes Property Perfect Plc and Grande Asset Hotels and Property Plc., a Thai property and hotel development group.

Thai AirAsia is 55% owned by local holding company Asia Aviation and the rest by AirAsia Investment, a 100% subsidiary of AirAsia Berhad. Last year, AirAsia’s group CEO Tony Fernandes said the company would be investing $150 million in an aircraft maintenance repair and overhaul facility at the U-Tapao airport. AirAsia has long aimed to build its own low-cost airports.

Development of the airport, which serves Pattaya and Rayong, is one of the five mega projects which the Thai government is undertaking as part of its Eastern Economic Corridor plan to develop the area as a prime economic zone for the ASEAN region. Part of the scheme is to turn Thailand into an aviation hub.

Among the megaprojects are high-speed rail links between U-Tapao airport and the two main airports of Bangkok—Don Mueang and Suvarnabhumi—and between U-Tapao airport and the main centre of Bangkok city. The project, which entails building a new passenger terminal, among other things, seeks to expand the annual passenger handling capacity of the airport to 15 million from the current 3 million. The consortium that has GMR is among three that have submitted technical proposals for the airport.

The final round of bidding is yet to happen. Last month, one of the bidders, the Charoen Pokphand (CP) Group-led Thana Holding Consortium, filed a lawsuit against the committee alleging that the selection process was unlawful. This happened after the EEC Policy Committee, the nodal body for the project, refused to accept its technical proposal, business plan and price offer as they were submitted after the deadline had passed. The committee has, however, carried on with the bidding process. The Thai government expects $43 billion as investment into the EEC over the next five years. The funding will come from the government, public-private partnerships such as the one for which GMR has shown interest, and foreign direct investment (FDI).

The persons cited earlier refused to share information regarding GMR’s plan for Indonesia. But local Indonesian papers said GMR has formed a consortium with Indonesian companies Waskita Karya and PT Cardig. ET couldn’t verify this independently. The project includes expansion of the existing terminal and building a new one.

GMR runs India’s busiest airport in Delhi and fourth busiest in Hyderabad. It is building a new airport in Goa and has won the contract to manage the airport in Nagpur. In February, the company emerged as the highest bidder for building a greenfield airport in Bhogapuram, Andhra Pradesh. It operates the Mactan-Cebu International Airport in Philippines, is building a new airport in Crete islands, Greece, and has an engineering procurement and construction contract for Clark International Airport at Philippines.