Airports of Thailand (AoT) has approved the results of the duty free and commercial tenders at Bangkok Suvarnabhumi and duty free concession at Phuket, Chiang Mai and Hat Yai International Airports.
Approval of the contracts, which were all won by current incumbent King Power International was granted at a meeting of the AoT Board of Directors earlier today (19 June).
Regarding the BKK duty free concession (28 September 2020 to 31 March 2031), AoT will collect 20% of monthly revenue before the deduction of expenses (excluding VAT), or the first year’s minimum annual guarantee (MAG) of THB15.4bn — $493m (excluding VAT) which was offered by King Power.
AOT will then increase the MAG in the years that follow. Adjustments will be based on the passenger growth and inflation rate of a previous calendar year.
REGIONAL AIRPORTS TENDER
For the regional airports duty free tender, which also runs from 28 September 2020 to 31 March 2031, AoT will collect the same monthly return of 20% before the deduction of expenses (excluding VAT), or the first year’s MAG of THB2.3bn —$73.6m (excluding VAT), as offered by King Power. Once again, AOT will increase the MAG in the following years based on passenger growth and inflation rate of a previous calendar year.
Finally, AoT will collect a 15% return on monthly revenue before the deduction of expenses (excluding VAT), or an MAG of THB5.8bn —$185.7m (excluding VAT), as offered by King Power, which also won the contract to manage commercial areas in the BKK passenger terminal.
Much like the other agreements, the contract will begin on 28 September 2020 and expire on 31 March 2031. AoT will also increase the MAG after the first year based on passenger growth rate and inflation rate of a previous calendar year.
As reported, King Power International was named highest bidder for the Bangkok Airport duty free concessions at the end of May.
The retailer, which has held the concession since 2006, overcame intense competition from a Bangkok Airways/Lotte Duty Free consortium and an alliance comprising Royal Orchid Sheraton Hotel Thailand and Dufry Group. The current King Power International contract expires in September 2020.
The new contract will cover around 20,000sq m of space at BKK and include the new satellite terminal which is due to open in 2020/2021.
King Power’s success in the BKK duty free tender was soon followed by a further triumph in the Thai regional airports tender. The retailer overcame the same private companies which bid for the BKK Airport duty free concession.
These were Bangkok Airways Company Limited, which is a joint venture comprising Bangkok Aviation, Hotte Lotte and Bangkok Airways Holdings and Royal Orchid Hotel (Thailand) and Royal Orchid Hotel (Thailand).
The approval of the duty free contracts marks the end of a controversial tender process which resulted in AoT separating BKK from an initial single available concession encompassing Chiang Mai, Hat Yai and Phuket International Airports.
The initial concession structure drew strong criticism from organisations such as the Thai Retailers Association and Thai Duty Free Shop Trade Association, which believed the master concession model was monopolistic.
The former actually favoured a concession by category model, much like the ones in place at Singapore Changi and Hong Kong International Airports.
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