Paweena Jariyathitipong, Deputy Managing Director of Engineering and Construction and Acting President of Airports of Thailand Public Company Limited (SET: AOT), revealed details regarding a meeting held with representatives of the King Power group on June 17.
During the meeting, King Power requested AOT to waive rental fees for all duty-free shops located at airports during the review of contract amendments as requested by King Power. The concessionaire proposed to pay only a revenue sharing fee at a rate of 20% of total sales.
However, Paweena firmly clarified that AOT cannot accept this request. As long as the AOT Board of Directors has not made any resolution to alter the contract, King Power is still obliged to pay all contractual benefits and fees to AOT under the existing agreement while awaiting findings from the independent consultant over the next 60 days.
Both parties’ proposals will be further examined, and a conclusion is expected within the next 3-4 days.
Additionally, King Power representatives expressed agreement with AOT’s decision to establish a screening committee and hire consultants who are experts and scholars from government academic institutions. This committee is to analyze ongoing problems and calculate a fair and appropriate rate for duty-free concession benefits to ensure justice for both parties.
Paweena added that the atmosphere of the discussions on June 17 was positive. She also indicated that King Power’s recent letter to AOT, proposing to discuss termination of its three duty-free concession contracts, does not reflect a genuine desire to cancel such contracts.
Rather, King Power believes AOT has shown little willingness to assist in the past even after formal appeals for assistance were previously ignored. Thus, King Power’s approach aimed to prompt AOT into serious negotiations.
According to reporters, King Power’s letter called for discussion on potential termination of three duty-free concession contracts:
- The duty-free concession at Phuket, Chiang Mai, and Hat Yai airports.
- The duty-free concession at Don Mueang Airport.
- The duty-free concession at Suvarnabhumi Airport.
King Power cited seven significant external factors that have severely impacted its business operations:
- Termination of inbound duty-free shops under government policy, resulting in lost revenue opportunities.
- Reduction in excise taxes for alcohol products, continuously lowering sales of alcoholic beverages.
- AOT’s requests to reclaim operational space inside passenger terminals to enhance passenger services.
- Proactive government measures leading to a decline in Chinese tourists.
- Domestic safety concerns in Thailand, resulting in fewer tourist arrivals.
- The COVID-19 pandemic, which led to zero air passenger traffic during certain periods.
- Ongoing international conflicts and global economic slowdown, negatively affecting purchasing power and international travel.
According to the proposal that has been objected by AOT, King Power has proposed that while AOT is considering the matter, compensation payments under the bidding contract be set at 20% of monthly duty-free sales. After each month’s sales are finalized, King Power Duty-Free (KPD) will calculate the fee based on 20% of sales and make the payment by the last day of the following month.
This arrangement would become effective from sales realized in July 2025, as the company has been granted a deferred payment schedule for minimum guarantee compensation from September 2024 to June 2025.
Sales results for July 2025 will be finalized after that month, and the 20% fee will be paid to AOT by August 29, 2025. As a result, KPD would not need to pay the minimum guarantee for July 2025, which would otherwise be due to AOT by the end of June 2025.
King Power also requested that this would not be regarded as a payment default and that this interim payment approach continues until both parties reach a negotiation settlement.
