THAILAND. King Power International is likely to be relieved at today’s announcement by Airports of Thailand (AOT) that it will tender a single duty free concession at Bangkok Suvarnabhumi Airport in a separate contract from Chiang Mai, Hat Yai and Phuket airports.

Although King Power, the long-time retail incumbent declined to comment when contacted by The Moodie Davitt Report, it will certainly know that the outcome could have looked much worse given the enormous external and political pressure piled on Airports of Thailand to break up the Suvarnabhumi business into multiple concessions. The big prize remains firmly in place and the incumbent will be hard to shift despite certain white-hot competition.

The tender is scheduled to be completed in May.

As reported, Airports of Thailand had initially opted to retain its traditional single duty free retailer model embracing four airports, Bangkok Suvarnabhumi, Chiang Mai, Hat Yai and Phuket airports. After much lobbying from rivals and resultant political pressure, the airport authority reviewed that model and has now amended the tender structure to a single duty free concession at the capital citys main airport and another contract covering the three smaller airports.

Grand prize remains in sight: Bangkok Suvarnabhumi Airport stays under a single-retailer model.

Suvarnabhumi Airport in Bangkok is one of Asia’s most important duty free concessions [Pictures above and below ©Martin Moodie/The Moodie Davitt Report]

King Power Internationals  contract at Suvarnabhumi is set to expire in 2020. A licence for non-duty free commercial activity at Suvarnabhumi, including food & beverage, services and foreign exchange, expires at the same time and is also being put to tender. So is a contract covering airport pick-up counters.

The AoT tender structure separates duty free pick-up counters from the main contract, paving the way for more travel retailers to be able to open downtown and deliver at the airport.

As we revealed previously, the next Bangkok Suvarnabhumi duty free concession will commence on 28 September 2020 and expire on 31 March 2031.

Under a revised timetable, bids for this concession must be submitted by 22 May, with technical presentations planned for 27/28 May, and Airports of Thailand will announce the results by 31 May.

A meeting at AOT offices scheduled for 22 April will offer further details to bidders. A site visit is scheduled for 23 April.

As reported previously, qualified bidders must either be Thai, or can be a consortium or joint venture that is led by a Thai company. In the case of the latter, all submissions must be under the name of the joint venture or consortium only.

Potential partners must not have any contract terminations, outstanding payments, outstanding debts or lawsuits with AOT, the documents stated.

All tenderers must have experience in managing department stores in Thailand covering a minimum of 5,000sq m for at least five years in a row, or have a minimum of five years running duty free shops in Thailand or overseas.

An updated timetable for the Chiang Mai, Hat Yai and Phuket airports duty free tender has yet to be published.

King Power is certain to face tough local and international competition for the concessions. Korean giants The Shilla Duty Free and Lotte Duty Free already have businesses in Thailand and other players such as Lagardère Travel Retail, Dufry and DFS will likely be among the mix. Given the importance of Chinese tourism in Thailand, China Duty Free Group could also be a contender, perhaps with an international partner, as seen at Hong Kong International Airport with Lagardère Travel Retail.

Airports of Thailand’s statement announcing the stand-alone Suvarnabhumi contract and tender timings, in Thai only (click to enlarge).

Powerful local retailer The Mall Group is being touted by local media as a candidate, while as reported, Thai retailer Central Department Store Company (Central Group) bid with DFS Group (through DFS Venture Singapore) to win the ten-year duty paid retail and services (mainly F&B) concession at the new U-Tapao Rayong-Pattaya International Airport. The Central Group/DFS partnership is also responsible for the airport duty free pick-up counters there. However, King Power took out the major spoils, after being awarded the ten-year duty free concession.

In February, Airports of Thailand reported a 10.31% increase in concession revenues for the first quarter ended 31 December 2018, to THB4,336.29 million (US$138 million).

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