Hot competition at Suvarnabhumi 

Update 19 April: The Bangkok Post reported today that several firms are competing for the various concessions to run duty free shops and other commercial spaces at Suvarnabhumi Airport.

Quoting Airports of Thailand (AoT) President Nitinai Sirismatthakarn, the media title said that the Central Department Store Company, King Power Duty Free, Minor International, Bangkok Airways Plc Co and the Royal Orchid Sheraton (Thailand) are contesting the duty free contract. Minor International, Central Pattana Plc Co, King Power Suvarnabhumi and The Mall Group are rivals for the devel-opment of other airport commercial business, Nitinai said.

Some of those bids will feature international partners. 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 late last year. The Central Group/DFS partnership is also responsible for the airport duty free pick-up counters there (King Power was awarded the airport’s ten-year duty free concession).

Korean giants Lotte Duty Free and The Shilla Duty Free both have businesses in Thailand: Lotte opened what it described as the first phase of a new downtown store in Bangkok’s spectacular new Show DC complex in June 2017. However, it has been unable to sell duty free due to the lack of pick-up rights at Suvarnabhumi and Don Mueang airports.

[UPDATE: A Lotte Duty Free spokesman told The Moodie Davitt Report, “Regarding the Bangkok concession, nothing has been determined yet. We are still considering it.”]

Shilla opened a 25,000sq m, two-storey building on the island of Phuket in November 2016, in-cluding an 8,000sq m duty free store. As reported, The Shilla Duty Free and two Thai part-ners (Gems Gallery and The Mall) established GMS Duty Free, a joint venture, in 2013 to launch and operate The Shilla Duty Free Phuket store.

We’ll bring you more detail on the bidders when available

THAILAND. A government-appointed panel set up to consider whether the Airports of Thailand (AoT) duty free tenders fall under the new Public-Private Partnership (PPP) Act announced its findings today, clearing the way for AoT’s open bids for the duty free contracts at Suvarnabhumi, Chiang Mai, Hat Yai and Phuket airports to proceed as structured.

The sub-committee concluded that the open bid (including the chosen single-retailer model for Suvarnabhumi) was not compromised by the new PPP act introduced last month.

As reported, the panel investigated (and ultimately agreed with) the AoT’s view that the infrastructure of an airport excluded commercial operations and its contention that the duty free tender, as revised, should therefore proceed. The AoT position has today been vindicated.

Prapas Kongdead, Director of the State Enterprise Policy Office Director and Secretary of the Board of the Joint State-Private Investment Policy (PPP Committee) disclosed the results of the PPP Board Meeting earlier today.

AOT President Nitinai Sirismatthakarn told local media, including The Nation, after a PPP board meeting today that the legal sub-committee’s report will be forwarded to the Cabinet on 24 April. Thereafter, bids will be called for the various airport duty free operations.

Bidder qualification will be decided on Monday 22 April with a decision likely in May. King Power International’s contract at Suvarnabhumi is set to expire in 2020.

The PPP decision vindicates AoT’s decision to offer a single duty free concession for the key Suvarnabhumi Airport business (plus separate contracts for the gateway’s duty free pick-up counters and non-duty free commercial activity, including food & beverage, services and foreign exchange). The news is sure to please King Power International, the master concessionaire incumbent since Suvarnabhumi’s inception in 2006.

It did not please the Thai Retailers Association, however, whose President Worawoot Ounjai (interviewed a day earlier by The Moodie Davitt Report) slammed the decision, telling the Bangkok Post, “We’ve seen poor results from this type of bidding before and called on the government for accuracy and transparency. But the answer comes as expected.”

While critics of Airports of Thailand’s proposed duty free tender model for Suvarnabhumi Airport contend that the contract should be split by category, notably for beauty products (above), liquor & tobacco and confectionery (below), AoT’s preference for a single concession seems to have been vindicated. [Pictures ©Martin Moodie/The Moodie Davitt Report.]

How influential Thai media The Nation reported today’s developments.

As evidenced by an interview with the Thai Retailers Association published by The Moodie Davitt Report earlier today, AoT has faced enormous external and political pressure to break up the Suvarnabhumi business into multiple concessions. In today’s interview the association continued to push for a multiple concession by category structure. {As pointed out in the interview, The Moodie Davitt Report has a duty to report all sides of this controversial story -Ed}

However, judging by today’s announcement (below) and subsequent report in The Nation, the big prize of the key multi-category Suvarnabhumi contract remains firmly in place. Like any long-entrenched national incumbent, King Power International will be hard to shift despite certain white-hot competition.

We’ll bring you more developments as they happen.

The official statement confirming today’s developments.

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