BANGKOK — Airports of Thailand PCL (AOT) is expected to proceed with King Power Group’s proposed terms in ongoing negotiations over duty-free concession contracts, aiming to avoid a costly termination that could disrupt operations at the country’s major airports.
King Power, Thailand’s largest duty-free operator, sent a letter to AOT in May seeking to terminate its contracts to manage duty-free operations at Suvarnabhumi, Phuket, Chiang Mai and Hat Yai airports. The contracts, held by Power Duty Free Co., Ltd., are valid through March 31, 2033.
At its October 29 meeting, the AOT board authorized management to negotiate with King Power to prevent termination, following studies by Mahidol University and King Mongkut’s Institute of Technology Ladkrabang that assessed the potential impact of both options. The studies concluded that renegotiation would offer greater benefits to AOT.
King Power CEO Nitinai Sirismatthakarn told Prachachat that AOT likely has already reviewed the company’s seven key proposals and is expected to initiate talks this week.
“King Power hopes AOT will treat our proposals with fairness and consider the new economic context rather than past figures,” Nitinai said. “The main issue is ensuring that future numbers do not fall further.”
He explained that duty-free operators are typically required to maintain a six-month bank guarantee, and when rent remains unpaid for several months, negotiations or termination decisions must follow promptly.
Nitinai said King Power hopes to reach a conclusion by the end of November. “If the current terms leave us earning less than our expenses, losses will continue,” he said. “But if revenue can at least cover costs, we can continue operating. AOT’s decision to negotiate shows its intention to help concessionaires move forward.”
Concessions Worth $735 million Annually
King Power won three duty-free concession contracts in 2019, with a total minimum annual guarantee valued at 23.55 billion baht ($735 million) in the first year, according to Prachachat Business.
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Suvarnabhumi Airport Duty-Free: 10 years and 6 months (Sept. 28, 2020–Mar. 31, 2031), valued at 15.42 billion baht ($482 million).
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Phuket, Chiang Mai, and Hat Yai Duty-Free: 10 years and 6 months (Sept. 28, 2020–Mar. 31, 2034), valued at 2.33 billion baht ($73 million).
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Suvarnabhumi Terminal Commercial Activities: 10 years and 6 months (Sept. 28, 2020–Mar. 31, 2031), valued at 5.8 billion baht ($181 million).
AOT reported 18 billion baht ($563 million) in earnings from King Power in 2024, accounting for about 27% of its total revenue.
A retail industry source told Prachachat Business that AOT is expected to accept King Power’s conditions. Terminating the agreements would cost AOT roughly 20 billion baht ($610 million) in annual revenue, and a new tender process could take up to two years — potentially leaving Thailand’s main airports without duty-free shops or restaurants.
Such a scenario would be unprecedented worldwide and could hurt both the tourism industry and the broader Thai economy, the source said.
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