AOT to review King Power’s request to terminate duty-free deal at 3 airports
Airports of Thailand PLC (AOT) is preparing to establish a committee to review King Power Duty-Free’s request to terminate its concession contract at three regional airports—Phuket, Chiang Mai, and Hat Yai.
The request, submitted in May, will require AOT to examine the pros and cons of cancellation, negotiate with the company regarding the potential impact, and verify any penalties stipulated in the contract, according to a news source.
AOT plans to present the matter to its board in mid-June following a detailed evaluation of the agreement’s terms and conditions.
King Power Corporation CEO Nitinai Sirismatthakarn explained that the request to cancel the contract was submitted before he took office. The company argues that the current contract terms have become unsustainable due to the Covid-19 pandemic, ongoing economic challenges, reduced inbound duty-free space, and declining passenger volumes. As a result, King Power has been incurring unsustainable costs and losses, prompting it to seek a renegotiation or partial contract termination.
The existing duty-free contract (No. AOT.DF‑1‑02/2562), signed on July 4, 2019, has a 10.5-year term from September 28, 2020, to March 31, 2031. Amendments were made in November 2020 and August 2022, with the current term running until March 31, 2026. Following the pandemic, AOT changed the calculation of minimum guarantee payments to a per-passenger rate of 127.30 baht. However, ongoing global challenges—including wars, trade disputes, and a sharp decline in high-spending Chinese travellers—have significantly affected sales.
King Power contends that these extraordinary circumstances have made the fees disproportionately high compared to actual performance and that contract amendments were made solely in AOT’s interest, without adequate consultation. The company has requested negotiations to seek a resolution—including possible contract termination—within 45 days.
