BAFS rating kept stable

Fitch Ratings (Thailand) has maintained its national long-term rating and stable outlook for Bangkok Aviation Fuel Services Plc (BAFS) on the back of its dominant market position.

BAFS is the sole operator of the fuel depot and hydrant network at Suvarnabhumi, the country’s largest international airport, and also the largest plane fuelling service provider at the airport, with a market share of 87%.

The company faces limited competition, and it benefits from high barriers to entry into the field such as a requirement that operators work under concessions from the airport.

Fitch expects demand for BAFS’s aircraft fuel uplift service will continue growing over the next two years, supported by local and regional economic growth.

BAFS is also the sole aviation refuelling service provider at Don Mueang airport.

Fuel uplift volume at Don Mueang has increased sharply since October 2012, when most budget airlines started relo- cating to Don Mueang from Suvarnabhumi.

The airport operator also plans to increase Don Mueang’s capacity to provide full regional service.

The first phase of the plan, involving renovation of the existing international terminal, which is currently not in use, is expected to be completed in May.

BAFS’s major cost is its pre-agreed concession fee, which means profitability is stable.

The company is insulated from fuel price volatility since its revenue is derived solely from fuelling service fees, while fuel is sold by oil companies to airlines.

Its major shareholders include Thai Airways International with a 22.6% stake and four major oil companies — Esso Thailand, PTT, Shell Cos in Thailand and Chevron (Thai) — holding 7% each.

Shares of BAFS closed yesterday on the Stock Exchange of Thailand at 26.75 baht, up 50 satang, in trade worth 3.68 million baht.