AOT Board approves negotiations with King Power to revise duty-free contracts
AOT's board has decided to negotiate with King Power to revise duty-free contracts, citing benefits over contract cancellation, with a focus on fairness and legal compliance.
Paweena Jariyathitipong, Managing Director of Airports of Thailand (AOT), revealed that during a board meeting on Wednesday, the AOT board approved the decision to proceed with negotiations with King Power Duty Free Co Ltd (KPD) regarding the structure of three duty-free contracts. These contracts include:
- Duty-free shops at Suvarnabhumi Airport
- Duty-free shops at Don Mueang Airport
- Duty-free shops at three regional airports: Phuket, Chiang Mai, and Hat Yai
The board believes this approach will be more beneficial for AOT than cancelling the contracts outright.
The negotiation strategy, devised by consultants, is designed to be fair and bring maximum benefit to AOT compared to the negative consequences of contract termination. Cancelling the contracts would lead to significant drawbacks, including the loss of duty-free services, lack of vendors and services, and the potential for a quieter airport. If the contracts were terminated, the process of selecting new operators would take considerable time—from drafting terms of reference, bidding, and announcing results—resulting in a prolonged loss of revenue for AOT.
AOT has received several proposed negotiation strategies from two public universities acting as consultants. The focus will be on selecting the best possible option for AOT, ensuring the terms of payment and compensation are fair and acceptable to both parties. The revised terms will continue from the existing contracts, with a commitment to legal compliance and fairness.
AOT plans to set up a negotiation committee, with talks with King Power expected to begin in November 2025. These negotiations are seen as a positive step for the organisation. AOT also confirmed that the revised contract will ensure that AOT’s revenue remains at least as high as the second-highest bidder during the original bidding process.
Paweena concluded, "No matter the direction of the negotiations, AOT is committed to securing fair compensation, ensuring sustainable revenue."
