Terminal Turbulence: Thailand Duty Free’s Concession Crisis
A pivotal moment is unfolding in Thailand’s duty-free retail sector as King Power Duty Free Co., Ltd., the nation’s preeminent operator, pushes for a drastic overhaul or potential termination of its lucrative airport concession agreements across five major international airports.
This unprecedented demand, driven by years of financial losses and a confluence of global and domestic challenges, has sent ripples through the financial markets and placed Airports of Thailand (AOT) under intense scrutiny.
AOT, a state enterprise and a key player on the Stock Exchange of Thailand, has seen its market value dip amidst the uncertainty. Its shares were notably affected in mid-June as news of King Power’s request surfaced.
The duty-free concessions are a major revenue source for AOT, accounting for approximately 17% of its total income, and a substantial portion of its non-aeronautical revenue, which rose to 41.07% in the first six months of fiscal year 2025.
Photo Credit: Kaohoon
King Power’s Struggles
The King Power empire, now led by CEO Aiyawatt Srivaddhanaprabha, inherited a formidable business from the late Vichai Srivaddhanaprabha. Once ranked as the 7th largest duty-free operator globally in 2018, King Power’s financial performance has been volatile since 2019, culminating in a drop to 10th place by 2023.
Financial highlights illustrate the deepening crisis:
2019: Net profit of THB 756 million on THB 38.5 billion revenue
2020 (COVID-19 impact): Revenue plummeted to THB 8.1 billion, resulting in a net loss of THB 1.83 billion
2021: Further decline to THB 1.6 billion in revenue and a net loss of THB 2.81 billion
2022 (Partial recovery): Revenue rebounded to THB 17.7 billion, yielding a net profit of THB 3.75 billion
2023 (Return to loss): Despite growing revenue of THB 33.6 billion, the company incurred a net loss of THB 651 million
These mounting losses led to an estimated THB 4 billion in unpaid concession fees owed to AOT by February 2025, according to former AOT President Kerati Kijmanawat.
Seven pillars of "Force Majeure": Why King Power is seeking Contract Termination
In May 2025, King Power formally requested to renegotiate or terminate its three airport duty-free concession agreements, which cover Suvarnabhumi, Don Mueang, Phuket, Chiang Mai, and Hat Yai airports. The company cited the following seven force majeure factors:
Suspension of Arrival Duty-Free Shops: A government policy effective 1 August 2024 discontinued inbound duty-free sales, disrupting King Power’s financial model.
Wine Tax Reduction: A Ministry of Finance policy announced in March 2025 reduced import duties on wine, eroding the pricing advantage of duty-free shops.
AOT Reclaiming Retail Space: Since November 2024, AOT has reclaimed 491.22 square metres of retail space previously operated by King Power.
Decline in Chinese Tourists: A lack of proactive safety measures has led to a steep drop in Chinese arrivals—a key demographic. Visitor numbers fell from 10.9 million in 2019 to 1.2 million in 2020.
Negative Domestic Conditions: Industrial shifts, cybercrime, and the March 2025 earthquake have hurt consumer confidence and tourist sentiment.
Lingering COVID-19 Impact: Prolonged global pandemic effects continue to suppress travel demand and airport retail sales.
Global Conflicts and Economic Slowdown: Geopolitical instability and economic headwinds have constrained global spending.
King Power argues that these unforeseen external factors have rendered its minimum guarantee payments under the concession contracts unsustainable.
AOT’s Response: Balancing National Interest, Contractual Obligations, and Tourism Revenue
AOT has acknowledged the request and emphasised the need for a fair resolution that protects both parties' interests and aligns with contractual obligations. The current concession agreements, which began on 28 September 2023 and run until 31 March 2033, are based on a “whichever is higher” formula — either a minimum guarantee or 20% of revenue.
During the COVID-19 pandemic, AOT temporarily shifted to a “Sharing Per Head” model to support concessionaires:
THB 233.40 per passenger for Suvarnabhumi Airport
THB 127.30 per passenger for regional airports
On 17 June 2025, King Power proposed a temporary payment model based on 20% of monthly sales. AOT declined the offer, insisting on minimum guarantee payments as per the existing contract. However, by 23 June, King Power formally applied to join AOT’s "extended payment terms scheme" for concessionaires facing liquidity issues.
On 25 June 2025, AOT’s Board of Directors approved King Power’s participation in the scheme.
Under this arrangement:
King Power may defer partial minimum guarantee payments for up to 8 months per tranche
Deferred periods include June–October 2025 (Suvarnabhumi), September–October 2025 (Don Mueang), and July–October 2025 (regional airports)
An 8.844% annual interest rate applies to deferred amounts
Additional collateral of THB 1.45 billion is required to secure AOT’s financial position
Next Steps and Key Stakeholders in Thailand’s Concession Dispute
AOT’s Study and Negotiations: Acting President Nattaya Chariyathitipong (former Executive Vice President for Engineering and Construction) confirmed that AOT will establish an independent committee and engage academic consultants to explore solutions. The study is expected to conclude within 60 days (by late August 2025).
Policy Direction: Deputy Prime Minister and Minister of Transport Suriya Juangroongruangkit has instructed AOT to proceed carefully and in the national interest. AOT maintains that the resolution must ensure both fairness and maximum benefit for the state enterprise.
Controversy and Conflict of Interest: New CEO Appointment Raises Questions
Further scrutiny has been fuelled by the appointment of Nitinai Sirismatthakarn, AOT’s former CEO (2015–2023), as King Power’s new CEO in June 2025. Given his prior role in contract revisions, the move has raised public concern over potential conflicts of interest.
Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO), noted that while the financial loss may not be severe, it still poses a disadvantage to the state.
Suggesting that the concession disruption may create opportunities for future restructuring, he said
“If AOT can find new bidders, the state might not incur any losses.”
Implications for Thailand’s Tourism and Investment Climate
The King Power and AOT crisis encapsulates the delicate equilibrium Thailand must strike between protecting public revenue and sustaining critical private sector operators that underpin broader vulnerabilities in Thailand’s tourism-dependent economy.
How this dispute is resolved will likely influence future investor confidence, concession frameworks, and the operating environment for major players in the country’s aviation and hospitality sectors.
With Thailand’s tourism recovery still fragile and international perceptions shifting, how this situation unfolds will set a precedent for public–private partnerships across the region.
The coming weeks will be decisive, not only for King Power and AOT, but for Thailand’s broader positioning as a resilient and competitive destination for tourism and investment.