AOT postpones decision on King Power duty-free contract!

AOT postpones decision on King Power duty-free contract!

Airports of Thailand Plc (AOT) is facing significant changes to its duty-free contracts with King Power Corporation. Currently, board members have postponed the decision on revising the King Power Duty Free contract until the next meeting in December. This action follows intensive discussions about the impact of the contract on AOT's operations and finances, such as Nation of Thailand reported.

Why this delay? According to an AOT representative, the complexity of revising the contract requires more time, so the item was postponed to the upcoming meeting. In principle, Mahidol University was entrusted with evaluating possible options, including the possibility of canceling the duty-free concession agreement or negotiating a revision.

A cancellation process would not be profitable for AOT. This would not only result in an immediate loss of revenue, but could also significantly delay the introduction of a new operator. It is estimated that the entire tender process could take around 14 months, which would place additional burden on AOT. Instead, negotiations with King Power appear to be the preferred route. In particular, a revision of the minimum guarantee could offer a solution here.

Contract negotiations and new framework conditions

Negotiations between AOT and King Power appear to have already entered a productive phase. Ms. Paweena Jariyathitipong, Senior Executive Vice President of AOT, recently announced the completion of these negotiations. The results will now be presented to relevant committees, including the AOT Revenue Committee. If there are no objections, the matter should be presented to the board for consideration on November 26, 2025 Kaohoon International informed.

One of the most significant changes relates to revenue sharing. Both parties have agreed on a participation rate of 20% of the monthly gross turnover, with the per capita calculation based on the actual number of passengers. King Power's old annual minimum guarantee of THB 15.41 billion is no longer applicable. However, the exact new rate is subject to the AOT's acceptance of the revised terms and conditions. About 17% of AOT's total income depends on revenue from the duty free sector.

Closure of duty-free shops and economic prospects

Another significant event will be the closure of all King Power inbound duty-free shops at AOT premises from August 1, 2024. This move follows a decision by the Thai Cabinet to promote domestic consumption. A reclamation of approximately 2,250.60 square meters of space has already been announced at airports such as Suvarnabhumi and Phuket. The financial impact could be significant, with a loss of approximately 126.25 million baht per month in minimum guarantees for Bangkok Airport alone, such as GTR Magazine reported.

To compensate for this loss of income, the AOT is already planning to prepare new projects to increase income from other commercial activities. The development remains exciting and the next steps of AOT and King Power will be closely monitored as the company sets the course for the future.

In the coming weeks it will be decided how the negotiations will end and what specific measures the AOT will take to secure its income.