Airports of Thailand Public Company Limited (SET: AOT) has announced that it is conducting a study and an analysis for possible solution options to duty-free shop operation problems at AOT’s airports.
The company reaffirmed that it received a letter from King Power Duty Free Company Limited (KPD) requesting for a discussion on solutions to be able to continue its business or other settlements as well as possible termination of duty-free concession contracts in major airports in Thailand.
AOT stated that it is under consideration on solutions with KPD and procurement of consultant services from a public higher education institution to conduct a study and an analysis for possible solution options to duty-free shop operation problems at AOT’s airports. AOT intends to propose the most suitable options derived from such study and analysis to proceed in accordance with the current situation for utmost benefits of AOT and fairness for concessionaires.
King Power cited ongoing challenges, beginning with the COVID-19 pandemic, which prompted AOT to change its calculation method for minimum guarantee payments to a per-passenger sharing scheme, currently set at THB 127.30 for each departing, transit, and arriving passenger.
However, the company argued that persistent effects from the pandemic—followed by new obstacles like regional wars, ongoing trade disputes, tariffs, and a global economic slowdown—have severely impacted passenger numbers, particularly from high-spending Chinese travelers, and dragged down sales.
The company outlined seven force majeure factors impacting its performance, driving the compensation it owes AOT above reasonable projections and leading to losses fueled by an “abnormally high” and unsustainable payment structure.
Details of Duty-Free and Commercial Concession Contracts Signed between AOT and King Power Group is as follows:
Duty-Free Concession at Suvarnabhumi Airport (BKK)
Concessionaire: King Power Duty Free Co., Ltd.
Original Contract Duration: 10 years and 6 months
Contract Period: September 28, 2020 – March 31, 2031
Minimum Annual Guarantee (MAG): 15,419 million THB
Duty-Free Concessions at Phuket (HKT), Chiang Mai (CNX), and Hat Yai (HDY) Airports
Concessionaire: King Power Duty Free Co., Ltd.
Original Contract Duration: 10 years and 6 months
Contract Period: September 28, 2020 – March 31, 2031
MAG: 2,330 million THB
Duty-Free Shop Concession at Don Mueang Airport (DMK)
Concessionaire: King Power Duty Free Co., Ltd.
Contract Duration: 10 years and 6 months
Contract Period: October 1, 2022 – March 31, 2036
MAG: Revenue guarantee of 1,500 million THB
Commercial Management Activities within Passenger Terminal at Suvarnabhumi Airport
Concessionaire: King Power Suvarnabhumi Co., Ltd.
Original Contract Duration: 10 years and 6 months
Contract Period: September 28, 2020 – March 31, 2031
MAG: 5,790 million THB
