AOT outlines duty-free concession plans following King Power contract termination

The Airports of Thailand (AOT) has released information regarding duty-free concession rights ahead of King Power’s request to terminate its contracts at three regional airports.

According to AOT, bidding for three duty-free concession rights took place in 2019, attracting a large number of proposals from both Thai and international operators.

However, King Power emerged as the winner for all three concession contracts. The company offered a combined minimum annual guarantee (MAG) totalling 23.54 billion baht in the first year.The details of each concession are as follows:


Duty-free operations at Suvarnabhumi Airport: A 10-year-and-6-month concession, running from September 28, 2020, to March 31, 2031. King Power offered a first-year MAG of 15.41 billion baht.
 
Duty-free operations at Phuket, Chiang Mai, and Hat Yai airports: Also a 10-year-and-6-month concession, from September 28, 2020, to March 31, 2031, with a first-year MAG of 2.33 billion baht.
 
Commercial management within the passenger terminal at Suvarnabhumi Airport: A 10-year-and-6-month contract, covering September 28, 2020, to March 31, 2031, with a first-year MAG of 5.79 billion baht.


King Power recently submitted a letter to AOT requesting discussions on terminating its duty-free concession contract at Phuket, Chiang Mai, and Hat Yai airports. 

The company cited the ongoing impact of the Covid-19 pandemic, which has yet to fully subside, as well as the effects of multiple regional conflicts, trade wars, protectionist measures, and tariff barriers. 

These factors, combined with the global economic slowdown and a sharp decline in high-spending Chinese tourists, have contributed to a significant drop in sales.

AOT provided relief measures during the Covid-19 pandemic by revising the calculation method for the minimum annual guarantee, switching to a per-passenger rate of 127.30 baht for each departing, transiting, and arriving passenger.

However, ongoing force majeure circumstances have continued to affect both sales and overall operations, leaving King Power liable for compensation payments to AOT at levels exceeding what would be reasonable or what was initially proposed.

As a result, King Power has faced continued financial losses, burdened by an abnormally high compensation rate that no longer reflects the actual business environment.

The company also noted that AOT has made decisions unilaterally, in a manner it deems beneficial only to itself, without consulting King Power to seek mutually fair solutions.



Given that these issues remain unresolved, King Power has requested a joint discussion to find a resolution, including consideration of contract termination, with the aim of reaching a conclusion within 45 days.

In response to King Power’s letter, AOT has prepared to establish a committee to thoroughly examine the matter. The committee will evaluate the advantages and disadvantages of terminating the contract, as well as assess the potential impact on duty-free operations in the affected areas.

The issue is scheduled to be presented to the AOT board of directors for consideration on June 16.

(2025/06/15-00:00)