Paweena Jariyathitipong, Deputy General Manager (Engineering and Construction Division) and Acting President of Airports of Thailand Public Company Limited (SET: AOT), disclosed to “Kaohoon” that on October 29, the AOT Board of Directors acknowledged the results of the study regarding solutions to issues surrounding the company’s airports duty-free concession, which mainly contains the operation of King Power Duty Free Company Limited (KPD).
The study, provided by two universities acting as consultants, concluded with two approaches: 1) terminating the contracts and initiating a new bidding process, or 2) amending the contracts through negotiation with King Power with eight proposed negotiation approaches from the consultants.
The board resolved that AOT should proceed with negotiations with the King Power Group to amend the three duty-free concession contracts: 1) the contracts for duty-free operations at Phuket, Chiang Mai, and Hat Yai airports; 2) the contract for Don Mueang International Airport; and 3) the contract for Suvarnabhumi Airport.
The board made its decision after a comprehensive evaluation covering legal, financial, and revenue aspects, and concluded that negotiating to amend the contracts would be more beneficial for AOT than termination.
Termination would result in an immediate loss of at least one year of revenue (with current income from King Power accounting for 17% of AOT’s total revenue), as a new bidding process would be required. The process could not be completed within 3–6 months, and there would also be a negative impact on the airport’s image, as the former duty-free space would be left empty—without retail, food, or beverages—for at least ten months.
From this point, AOT management will consider appointing a negotiating party to represent AOT in talks with King Power, which will commence immediately in early November and conclude within the same month. The AOT Board-approved negotiation framework aims to maximize benefits for AOT, maintaining that the revenue sharing ratio will not be less than the existing contract, but revising the annual minimum guarantee to be more suitable and fair for both sides.
The most valuable of the existing duty-free concession contracts is at Suvarnabhumi Airport, with a term of 10 years and 6 months (September 28, 2020 to March 31, 2031). King Power committed to an annual minimum guarantee of THB 15,419 million, equating to a minimum guarantee of THB 371 per passenger or 20% revenue sharing (of monthly revenue before costs are deducted), whichever figure is higher in a given year.
The previous concession indicated that AOT can increase the minimum guarantee in subsequent years, using the MAG (i) formula, which takes into account both passenger growth and inflation rates from the previous calendar year.
However, AOT has previously calculated and raised the minimum guarantee on its own, without negotiation with King Power—contrary to contract stipulations requiring prior discussions on any changes. This has been a key reason for King Power’s request to terminate the contracts: AOT has acted unilaterally and in its own favor, failing to engage in joint discussions or consider impacts on King Power, including concerns about fairness in the partnership.
Paweena further stated that, in the upcoming negotiation, the total annual compensation must not be less than THB 8,516.6 million—the figure that the second-highest bidder, Bangkok Aviation-Lotte Duty Free Consortium (Suvarnabhumi Airport) (comprising Bangkok Airways Public Company Limited (SET: BA) 49%, Hotel Lotte Co., Ltd. 49%, and Bangkok Airways Holding Co., Ltd. 2%), had previously offered in the 2019 bidding process.
Regarding progress on selecting the new president of AOT, following the board’s resolution on September 24, 2025, Paweena has been selected as the successful candidate. The company later submitted the matter to the Ministry of Finance for consideration and approval, including review of remuneration, benefits, and other terms. The entire process is expected to be completed and official contract signing concluded within December 2025.
At the end of May 2025, KPD has sent a letter to the AOT president seeking discussions on terminating three duty-free concession contracts, citing seven significant business-impacting reasons beyond their control:
1) The government’s closure of arrival duty-free shops, eliminating a vital revenue source.
2) The reduction in alcohol import duties, which has caused a steady drop in alcoholic beverage sales.
3) AOT’s request to reclaim space within passenger terminals for passenger service upgrades.
4) Proactive government measures leading to a decline in Chinese tourist numbers.
5) Domestic security concerns causing fewer foreign visitors.
6) The COVID-19 pandemic, which reduced passenger numbers to zero.
7) Global crises such as war and economic slowdowns, which hurt consumer spending and international travel.
These effects have led to KPD incurring losses from excessively high and unrealistic compensation rates, necessitating deferment of certain financial obligations. These were force majeure events for which KPD was not at fault.
