PTT to run retail at Udon Thani airport
Deal underscores shift towards non-oil business
SET-listed PTT Plc, the national oil and gas conglomerate, is branching out into property management, according to a key company official.
The move is part of a plan to diversify into other sectors at a time when global oil prices remain weak, said Auttapol Rerkpiboon, senior executive vice-president for oil business.
PTT recently signed a memorandum of understanding (MoU) with Airports of Thailand (AoT) for the rights to manage expanded commercial areas at Udon Thani airport.
According to the MoU, the right to construct and upgrade the airport will remain under the purview of AoT, while PTT will own the rights to operate and manage commercial space in the airport after construction is completed.
Udon Thani is one of the busiest airports in the Northeast, which offers transport links to neighbouring Laos.
The city of Udon Thani is about 475 kilometres from Bangkok and has domestic flights to Bangkok’s Suvarnabhumi and Don Mueang airports as well as to Chiang Mai airport.
Udon Thani airport receives 22 flights a day and the number of passengers is rising by 5% a year, moving the government to approve airport expansion to meet increases in passengers as Thailand is promoted as a gateway to Asean countries.
The plan to expand the airport includes refurbishment of its passenger terminal. The aircraft parking bays will also be expanded to receive 10 aircraft, up from six.
PTT is among Thailand’s oil retail operators that are switching their focus completely to the nonoil battlefield next year, away from oil sales that generate low margins.
Mr Auttapol said the property management business will be run by PTT Oil Retail Co (PTTOR), which PTT is planning to list on the Stock Exchange of Thailand next year.
The tender for Udon Thani airport is expected to be officially awarded by the first quarter of next year, after all aviation traffic is settled by AoT.
“We decided to diversify into this sector because we want to gain knowledge of property management and link it to our retail business,” Mr Auttapol said.
PTT has also invited its strategic partners to open shops in the airport, including Amazon Coffee, Daddy Dough and Texas Chicken.
In the initial stages of developing the new business, Mr Auttapol said the company will not focus on maximising profit. Instead it will concentrate on gaining property development knowledge.
PTT is not exactly new to the property management business: it operates the Energy Complex Building (Enco), in which PTT and PTT Exploration and Production Plc have equal ownership.
The building has a total area of more than 300,000 square metres.
But Mr Auttapol said the business model that Enco operates under is different from what Udon Thani airport will require. The company will need to attain distinctly separate knowledge to manage the airport’s commercial property.
Mr Auttapol said it will take about a year for PTT to evaluate the new business before making a final decision about whether to move on with it or leave it.
PTTOR recently sealed a business deal with Hua Seng Hong Restaurant to develop its dim sum franchise at PTT petrol stations. Hua Seng Hong has opened more than 10 shops at PTT stations nationwide.
PTT shares closed yesterday on the SET at 362 baht, down three baht, in heavy trade worth 1.68 billion baht.