BANGKOK — A major disruption has emerged in Thailand’s airport business sector as King Power Duty Free Company Limited (KPD) submitted a formal request to cancel its duty-free concession contracts with Airports of Thailand Public Company Limited (AOT).
The news first surfaced on social media on June 13, indicating that the cancellation affects five airports: Suvarnabhumi Airport, Don Mueang International Airport, Phuket International Airport, Chiang Mai International Airport, and Hat Yai International Airport.
The announcement immediately impacted AOT’s stock price, which plummeted 8.40% on Monday morning. AOT brought the matter to its board meeting on June 16, where Acting CEO Ms. Paveena Jariyathitipong revealed that the board resolved to establish a working committee to review solutions for duty-free operations across AOT-managed airports.
The company will also engage consultants from state universities to study legal, economic, financial, and business management alternatives, with consultants expected to be appointed within two weeks and the study completed within 60 days or by August 2025.
King Power Contributes 17% of AOT Revenue
Ms. Paveena disclosed that revenue from King Power accounts for 17% of AOT’s total income. She emphasized that AOT maintains strong financial stability and has plans to diversify revenue sources, including electrical system services, air conditioning systems, ground services, and commercial development around all six AOT airports. These initiatives will strengthen financial security and support future investment plans without affecting organizational stability.
AOT is scheduled to hold discussions with King Power on June 17 to gather additional input and seek fair solutions. Regarding outstanding payments owed by King Power, these remain within the security guarantee limits that King Power has provided as collateral under contract terms, serving as financial security for unexpected circumstances.
Government Maintains No Loss if New Operator Found
Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO) under the Ministry of Finance, stated he is closely monitoring the situation as AOT targets approximately 3 billion baht in annual treasury contributions, with 33% derived from King Power’s lease agreements. Of this amount, roughly 10-20% comes from areas King Power is requesting to return, while the remaining 70-80% comes from Suvarnabhumi Airport space rentals.
He noted that while lost revenue won’t be substantial, any revenue loss would still disadvantage the state. However, he believes that if contracts are cancelled, AOT will need to find new tenants. “If AOT can secure new bidders, the state may not suffer losses,” he said.
As the Ministry of Finance is a shareholder in AOT, it must await explanations alongside other shareholders. In its capacity overseeing state enterprises, the ministry will monitor the contract cancellation and its impact on state revenue. If King Power’s contracts are terminated, penalty payments will be due to AOT, and both parties must comply with contractual obligations.
New CEO Appointment Precedes Cancellation Request
The contract termination request emerged after King Power appointed Nitinai Sirisarntkarn as its new CEO on June 4, 2025. Nitinai previously served as AOT’s CEO for two terms, totaling eight years.
In its letter to AOT, KPD cited various factors necessitating contract termination discussions, including:
- Cessation of inbound duty-free shop operations in line with government policy
- Tax reductions on wine affecting duty-free sales volumes
- Reclamation of AOT’s commercial space
- Lack of proactive public sector measures for tourist safety management, resulting in declining Chinese tourist numbers
- Thailand’s domestic situation negatively impacting tourist and passenger numbers
COVID-19 pandemic impacts - Trade War situations and global economic slowdown
“All of these factors have direct and indirect effects on KPD’s inability to operate business and comply with the established contracts and caused KPD’s continuous loss. The abovementioned force majeure factors are beyond KPD’s control,” the KPD letter stated.
KPD’s operating contract with AOT runs from September 28, 2020, to March 31, 2033. According to reports, KPD has requested negotiations conclude within 45 days. During the interim period before resolution, the company proposed paying concession fees at 20% of monthly duty-free sales starting in July, with payments to AOT due by August 29, requesting this not be considered a payment default.
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