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Suvarnabhumi » Two aviation fuel pipeline operators set to go in court

Sunday, July 20th, 2008

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A dispute between the two aviation fuel pipeline operators serving Suvarnabhumi Airport has escalated into a lawsuit filed by JP-One Asset Co against rival Thai Petroleum Pipeline Co Ltd (Thappline).

JP-One, a subsidiary of Stock Exchange of Thailand (SET) listed Bangkok Aviation Fuel Services Plc (Bafs), is claiming 5.18 billion baht in compensation for alleged tort and violation of the Trade Competition Act.

Thappline, a subsidiary of PTT Plc, is named as a defendant along with its directors in the suit, filed in the Thanyaburi Provincial Court. The suit follows an earlier complaint JP-One had made to the Commerce Ministry, claiming that Thappline was engaged in price-dumping.

A source from JP-One said the suit centred on Thappline’s fee structure for transporting jet fuel to Suvarnabhumi Airport. JP-One claims its rival is charging fees below its actual service and investment costs, by maintaining the rates it charged at the now-closed Don Muang Airport.

The court documents claim that Thappline charges 22.47 satang a litre to transport fuel from Map Ta Phut via Si Racha and Lam Luk Ka to Suvarnabhumi, a distance of 241 kilometres. Charges for transporting fuel from Si Racha to Suvarnabhumi (171 km) are 17.92 satang per litre.

The rates are the same as those set for the Map Ta Phut-Don Muang and Si Racha-Don Muang routes respectively, even though the routes to Suvarnabhumi are 11 km longer.
JP-One claims, Thappline spent 1.6 billion baht to lay a new pipeline to Suvarnabhumi.

JP-One charges 17 satang per litre to transport fuel from its Chong Nonsi depot via Makkasan to Suvarnabhumi, a distance of 44 km. It spent 700 million baht on new infrastructure to serve Suvarnabhumi.

The source said the lawsuit named Thappline’s directors because its board set the prices. The Thappline board comprises representatives of oil companies, which are its clients and would directly benefit from low transport fees.

The JP-One executive says the fee structure will worsen Thappline’s existing accumulated loss of around 10 billion baht and debts.

The practice, he said, demonstrated Thappline’s intention to use ”predatory pricing” to eliminate competition by forcing JP-One to take on a financial burden that could put it out of business.

He said that if Thappline gained a monopoly on fuel transport, it would violate an International Air Transport Association standard that requires international airports to maintain dual fuel-supply systems for stability and security purposes.

In addition to claiming damages, JP-One is asking the court to order Thappline to increase its fees to 45.55 satang per litre for the Map Ta Phut-Suvarnabhumi route and to 29.72 satang from Si Racha.

Last month, JP-One filed a dumping complaint to the Commerce Ministry’s Competition Board against Thappline.

Thappline said in response that it was able to sell fuel at Suvarnabhumi at the Don Muang price because the distance to the new Bangkok airport from its depot in Lam Luk Ka, Pathum Thani, was nearly the same as to the former Bangkok Airport, Don Muang.

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