AOT’s new contract terms vary depending on the location. Image: Kylle Pangan/Unsplash.

Following a board meeting yesterday, Airports of Thailand (AOT) has approved a set of solutions to contract issues with its duty-free operator, King Power Duty Free (KPD), arising from changed market conditions in Thailand – most notably the scrapping of arrivals duty-free shopping.

The airports affected are Bangkok’s Suvarnabhumi Airport (BKK) and Don Mueang International (DMK), plus the three key regional gateways of Phuket International (HKT), Chiang Mai Airport (CNX), and Hat Yai International (HDY).

At the end of October 2025, AOT’s board of directors resolved to find a solution to the duty-free quandary – flagged in the early summer – based on the findings of a consultant hired specifically to examine the options.

The findings were used as a framework for negotiation with KPD “for AOT’s maximum benefit while ensuring fairness to the contracting party”, said AOT in a statement today. Across the five airports mentioned above, AOT considered two options: contract amendment or contract termination. The latter decision would require a new bidding process that could easily take more than a year.

AOT said it will amend the King Power contract by adjusting the concession conditions “in alignment with the actual circumstances arising during contract management”. In reaching this conclusion, AOT took the following factors into account:

– Ensuring business continuity: Providing continuous passenger services given that duty-free retail is considered an essential component and retaining KPD for this purpose

– Stabilising revenue flow: AOT to continue receiving concession fees (at an appropriate level) to avoid revenue gaps during any potential bidding process for a new concessionaire, and any revenue loss due to the absence of a service provider

– Gaining the best return: Amendment was found to provide a higher financial return than the minimum return expected from seeking a new concessionaire under the current circumstances

– Minimising economic damage: Contract termination would also affect overall employment among related operators, thereby impacting the wider airport economy.

No more arrivals duty-free was a trigger for the current duty-free woes at AOT.   

The best financial option: contract amendment

Weighing up these options, AOT said that by adjusting the concession, it would allow for continuous operation and help reduce potential adverse impacts. The operator added: “The amendment approach will be more beneficial to AOT than terminating the contract and initiating a new bidding process. AOT will lose revenue from concession fees until a new concessionaire is appointed, which is expected to take no less than 14 months.”

AOT also outlined tailored airport solutions, assuming the basic conditions such as minimum guarantees, revenue sharing, and additional concession fees are met.

BKK solution – The minimum guarantee on a per-passenger basis at Suvarnabhumi continues to be collected under a passenger-based principle, charged annually (equivalent to THB232.90 ($7.30*) per passenger with a continuous annual growth rate of 5%). In addition, AOT has negotiated a revenue-sharing component of 35% on the excess spending per head. This gives AOT an opportunity for extra revenue if there is a strong aviation recovery (the original contract provided only a 20% revenue-sharing rate throughout the contract term).

Extending the term for an additional two years has been proposed as the BKK Development Plan includes the completion of the South Terminal by around 2032. The extension covers the period when all areas of the existing passenger terminal, currently used by KPD, will need to be closed for alterations between 2032 and 2035. As new concessionaires are unlikely to be interested in any bidding processes at this time, the contract extension ensures retail continuity at BKK.

DMK solution – At Don Mueang, a minimum guarantee per square metre will continue to be collected (calculated at THB39,187.76 ($1,228.60) per square metre per month) along with revenue sharing of 20% as per the original contract. If traffic recovery exceeds 100%, AOT will return to a previously agreed minimum guarantee rate. An extension of the contract term is proposed because, under the airport development plan, the current concessionaire is required to relocate its services to Terminal 3 and dismantle its existing investments in the old terminal building.

Regional airports solution – For HKT, CNX and HDY, the operator said “the minimum guarantee continues to be collected under the same passenger-based principle and charged annually (equivalent to THB129.67 ($4.06) per passenger with a continuous annual growth rate of 5% starting from 2030 (reflecting improving traffic), or an average of THB134.70 ($4.22) per passenger over the contract term). As with BKK, AOT has negotiated an additional revenue-sharing component of 35% on any excess spending per head.

AOT noted: “However, after the contract amendment, in the event that the business returns to its original state as outlined in KPD’s duty-free business proposal, AOT reserves the right to collect concession fees as proposed in KPD’s proposal.” The operator added that it still reserves the right to terminate the existing KPD concession and initiate a new bidding process.

READ MORE: Duty-free concession revenue drags down Airports of Thailand

READ MORE: King Power enters AOT payment scheme amidst ongoing liquidity issues

* FX conversions at today’s rate.