VZCZCXRO4848
PP RUEHCN RUEHDT RUEHGH RUEHHM RUEHVC
DE RUEHCHI #0189/01 3040825
ZNR UUUUU ZZH
P 310825Z OCT 06
FM AMCONSUL CHIANG MAI
TO RUEHC/SECSTATE WASHDC PRIORITY 0314
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBK/AMEMBASSY BANGKOK PRIORITY 0584
RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 0352
RUEHOO/CHINA POSTS COLLECTIVE
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 0002
RUEHKA/AMEMBASSY DHAKA PRIORITY 0001
RUEHCI/AMCONSUL CALCUTTA PRIORITY 0004

UNCLAS SECTION 01 OF 02 CHIANG MAI 000189 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ASEC TH
SUBJECT: AIRPORT EXPANSION UNPREPARED FOR EARLY TAKE-OFF 
 
CHIANG MAI 00000189  001.2 OF 002 
 
 
¶1.  (SBU)    Summary.  Chiang Mai International Airport rushed 
to inaugurate a new international passenger terminal October 27, 
reportedly to be ready for the grand opening of the Royal Flora 
horticultural exposition on November 1.  The hasty opening put 
immigration controls back on manual operations, in the absence 
of funds needed to transfer computers and other passenger 
tracking equipment.  Mandated three years ago by former Prime 
Minister Thaksin Shinawatra and built by companies closely 
associated with the former government, the new facility can 
accommodate double the number of passengers now served.     End 
summary 
 
¶2. (U)  One month after opening Bangkok's new Suvarnabhumi 
airport, Airports of Thailand (AOT) Managing Director Chotsak 
Asapaviriya inaugurated a new international terminal at Chiang 
Mai.   The airport expansion, one of a number of construction 
projects by which former PM Thaksin sought to boost his home 
town, aimed to position Chiang Mai as the aviation hub of the 
Greater Mekong Subregion (GMS).  Although the existing facility 
had not yet reached capacity and international passengers 
currently constitute only ten percent of total arrivals, the 
expansion provided room for 6.5 million passengers.  The full 2 
billion baht (USD 54 million) airport project is scheduled for 
completion in 2007. 
 
----Security Left Behind---- 
 
¶3.  (SBU)   Despite the fact that Consulate and Department of 
State officials touring the unfinished terminal in July were 
told that the new facility would not be ready until January 
2007, airlines learned on Oct. 16 that the new airport would 
open eleven days later.  Security procedures suffered in the 
transition, as the PISCES traveler identification system funded 
by the U.S. Government remained behind at the old terminal. 
Days after the opening, international passengers were being 
checked into the country manually, with information entered into 
a computer system some time later.  According to immigration 
contacts, the holdup was lack of funding, with an estimated 1.7 
million baht (USD 46,000) needed to transfer the system. 
 
----Construction Deals Tied to Thaksin---- 
 
¶4.   (SBU)  Consulate contacts in the construction business 
revealed that all contracts for the expansion were awarded to 
companies tied to former PM Thaksin's Thai Rak Thai (TRT) Party. 
 The most lucrative projects went to Sino-Thai Engineering and 
Construction in Bangkok and Chiang Mai Construction Company, 
associated respectively with former Deputy Minister of Public 
Health Anutin Charnviraku and former Minister of the PM's Office 
Newin Chidchob.  Other bids were won by companies connected to 
Thaksin's brother, former MP Payap Shinawatra, and former Deputy 
PM Suwat Limpatapanlop. 
 
----China Connections---- 
 
¶5.  (U)   On the plus side, the airport expansion does provide 
the infrastructure for future growth in Chiang Mai tourism, 
trade, and services.  The head of the Tourism Business 
Association of Chiang Mai, Songvit Ittipatanakul, whose company 
Standard Tours specializes in tours from China and Taiwan, told 
the Consul General that several Chinese airlines, including 
China Eastern, had visited Chiang Mai to "survey" the situation. 
 For now, he said, most Chinese tourists arrive in the north via 
Bangkok, rather than on the twice-a-week flights to Kunming or 
four-times-a-week connection to Jinghong in Yunnan province. 
He urged AOT Director Chotsak to promote flights between 
Shanghai and Chiang Mai. 
 
----Growing Air Cargo Business---- 
 
¶6. (U)    The airport expansion also benefits Chiang Mai's 
growing air cargo business, which generates 610 million Baht 
(USD 16.5 million) sales volume annually, up from  410 million 
Baht (USD 11 million) six years ago.  Thai Airways Cargo Manager 
Sucheep Hiranyapreuk reported that electronics parts being 
exported from the industrial estate in nearby Lamphun make up 
the bulk of this revenue.   Major air cargo destinations are 
Europe, Japan, Singapore and Hong Kong.  Agricultural products 
from southwestern China, such as shitake mushrooms, pass through 
Chiang Mai for re-export to Japan; Sucheep also cited fresh 
produce, flowers, and breeding dogs arriving from Kunming 
 
¶7.  (U)   In addition to the new 15,450 square meter 
international terminal, the project has increased parking, 
expanded the cargo building and aircraft parking area, and 
lengthened the runway to 3,400 meters; USD 15 million remains 
 
CHIANG MAI 00000189  002.2 OF 002 
 
 
for renovation of the domestic terminal, a fuel filling system, 
and rapid exit taxiway.  The airfield itself dates back to 1921, 
when a Muslim immigrant from Yunnan donated land at the foot of 
Doi Suthep for a runway.  Occupied by the Japanese air force 
during World War II, the field was strafed by the China-based 
"Flying Tigers" American Volunteer Group in 1942.   Commercial 
passenger flights from Chiang Mai began in 1947. 
 
¶8.  (U)   Currently Thai Airways International, China Airlines, 
Bangkok Airways, Lao Aviation, Mandalay Airlines, Air Asia, 
Tiger Airways, Silk Air (Singapore), and Hong Kong Express 
Airways fly from Chiang Mai to Kunming, Taipei, Jinghong, Luang 
Prabang, Rangoon, Mandalay, Kuala Lumpur, Singapore, and Hong 
Kong.   Combined with international passengers who transit 
Bangkok, a total of 295,000 travelers per year pass through 
immigration procedures in Chiang Mai.  These international 
arrivals account for slightly less than one-tenth of all 
passengers using the Chiang Mai airport. 
 
----Following the Tourism Trail---- 
 
¶9.  (U)  Bangkok Airways, cited as the best example of a company 
working to take advantage of Chiang Mai's location and tourist 
appeal, operates direct flights to Jinghong in China's Yunnan 
province, as well as Thai tourist spots Samui and Sukhothai. 
The company plans to open a route between Chiang Mai and 
Cambodia's Siem Reap but currently lacks enough aircraft. 
 
¶10.  (U)   Twice-a-week flights to Hong Kong, started in June by 
Hong Kong Express Airways, have done well so far, although the 
company reports a decline in Thai passengers since the opening 
weeks.   The current timetable is more attractive for tourists 
from Hong Kong than those from Chiang Mai, who find themselves 
arriving in Hong Kong at 9 pm.   Nevertheless, the airline plans 
to introduce Boeing 737s on the route next year to accommodate 
more passengers. 
 
¶11.  (SBU)    Not all international flights have been 
successful, however; a Thai Airways (TG) Chiang Mai-Chittagong 
connection inaugurated in late 2002 closed three years later. 
While TG cited a need to allocate aircraft to other routes, a 
travel agent reported that the airline lost money as a result of 
having to send back Bangladeshi passengers who arrived with 
forged passports.   The airport authority is now surveying 
potential destinations in India. 
 
¶12.  (U)   Comment.   Even without Chiang Mai-booster Thaksin in 
the driver's seat, his legacy of insider deals and unilateral 
decision-making combined with genuine infrastructure 
improvements lives on.  While neither quite ready nor urgently 
needed, the new airport facility bolsters Chiang Mai's claim as 
the center of the Greater Mekong Subregion and positions it to 
take advantage of further trade and tourism openings to China 
and neighboring countries. 
CAMP