King Power moves to quit duty-free contracts at Phuket, Chiang Mai, and Hat Yai airports over unsustainable fees. AOT hires consultants as the gauntlet is thrown down. Talks continue amid weak tourism, falling Chinese arrivals and pressure to protect state revenue.
The downturn in Thailand’s foreign tourism economy is reflected in a recent move by King Power Duty-Free, which is seeking to cancel its contracts at three major Thai airports. In May, the company requested to return its concessions at Phuket, Chiang Mai, and Hat Yai airports, citing a minimum per-passenger charge imposed by the airport authority. However, the firm also expressed a willingness to reach a compromise with Airports of Thailand (AOT), the state agency overseeing airport operations. AOT is now bringing in consultants to assess the situation and determine the best path forward.
Airports of Thailand Public Company Limited (AOT) is preparing a firm response to a recent move by King Power Duty-Free Company Limited (KPD). The airport operator will set up a special team to analyze duty-free contracts at three major regional airports. These include Phuket, Chiang Mai and Hat Yai.
The development follows a letter submitted by KPD to AOT in May 2025. In the letter, King Power requested to cancel its duty-free contracts for the three airports. The company cited revenue losses that have rendered the contracts financially unviable. AOT will raise this issue during its board meeting on Monday, June 16, 2025.
To tackle the issue, AOT will first establish a contract analysis committee. Additionally, the airport operator will hire external consultants from state-run higher education institutions.
AOT brings in public university experts to ensure a fair analysis of King Power’s duty-free contract dispute
This is to ensure that the contract review is both neutral and comprehensive. According to AOT, the consultants will assess options and propose practical solutions.
Importantly, the study will reflect today’s economic realities and changes in air travel patterns. The review is expected to be completed within 60 days. The findings will then be submitted to the AOT board for consideration. If approved, the board may adjust the current approach to better serve AOT’s interests.
In the meantime, AOT assures travellers that duty-free services will continue as usual. KPD will maintain operations at all three airports during negotiations. According to the agency, passenger service quality will not be affected.
Nevertheless, the dispute marks a growing tension between KPD and AOT. King Power argues that AOT has failed to act in a balanced or cooperative manner. In its letter, KPD stated that AOT made changes to compensation terms without fair negotiation.
Originally, the contracts required KPD to pay a fixed minimum fee. However, after the COVID-19 outbreak, AOT switched to a “sharing per head” model. Under the new scheme, KPD must pay ฿127.30 per passenger — whether outbound, inbound, or in transit.
King Power challenges per-passenger fee model citing unsustainable costs and lower Chinese tourist traffic
However, King Power believes this amount is too high. The company says it is no longer sustainable due to falling passenger numbers and weak tourism markets. In particular, Chinese tourist numbers remain well below pre-pandemic levels.
King Power CEO Nitinai Sirismatthakarn confirmed that the letter was sent in May 2025. He said the company had been facing financial challenges before he took office. These challenges include the effects of COVID-19, global conflicts and trade disruptions.
Previously, KPD had informed AOT of seven separate force majeure events. These included war, global economic downturns, and supply chain issues. The company claimed these factors directly hurt duty-free sales and operations. Consequently, KPD requested to delay benefit payments to AOT.
Yet, King Power says AOT did not respond cooperatively. Instead, AOT allegedly continued to enforce strict terms favouring its own interests. “AOT acted without proper negotiation,” King Power wrote in the letter.
Therefore, the company asked to open discussions to find a solution. Termination of the contract was one of the options proposed. In addition, KPD requested a firm conclusion within 45 days from the date of the letter.
King Power proposes a temporary payment model during talks while urging AOT not to label it a default
While negotiations are ongoing, KPD has proposed a temporary payment model. Starting July 2025, the company offers to pay 20% of its monthly sales as compensation. It will calculate sales at the end of each month and pay on the last day of the following month. The first instalment would be paid by August 29, 2025.
Moreover, KPD has asked AOT not to consider this alternative payment plan as a default. The company emphasized that it is trying to find a fair and cooperative solution.
Meanwhile, AOT remains focused on transparency and good governance. The state agency said it would continue to operate under ethical standards and accountability. AOT also reaffirmed its duty to protect stakeholders — including investors, passengers and the broader Thai economy.
In fact, AOT views its airports as critical to the national image. Thailand continues to promote itself as a global tourism and air transport hub. Thus, resolving this issue quickly and fairly is considered a top priority.
The long-running relationship between AOT and King Power is now under serious strain. KPD is Thailand’s largest duty-free operator and holds contracts at multiple airports. The company was founded by the late Vichai Srivaddhanaprabha, who died in 2018. He built King Power into a major retail and property empire.
Top Thai firm, led by Aiyawatt Srivaddhanaprabha, holds vast business interests beyond duty-free retail
His son, Aiyawatt Srivaddhanaprabha — also known as “Top” — now leads the company. Aiyawatt serves as CEO and chief commercial officer of King Power. He also chairs Leicester City Football Club in England, which the family owns.
The Srivaddhanaprabha family is among Thailand’s most prominent business dynasties. They also hold significant interests in property, including MahaNakhon Tower in Bangkok, one of Thailand’s tallest skyscrapers.
The outcome of this contract dispute may have far-reaching implications. For one, it could reshape the future of airport retail in Thailand. It may also set a precedent for how public-private airport agreements are structured under economic stress.
Notably, this is not the first time the Thai airport retail space has seen controversy. In the past, critics have pointed out King Power’s dominance and lack of competition. Some have called for more transparency in contract bidding processes.
AOT seeks credibility boost with academic review ahead of key June 16 meeting on airport retail contracts
Therefore, AOT’s move to bring in academic consultants may signal a shift. By relying on public institutions for analysis, AOT seeks to enhance credibility and avoid conflict of interest.
Looking ahead, the next major milestone is the AOT board meeting on June 16, 2025. There, the analysis plan and the King Power dispute will be formally discussed. Any decisions made could significantly influence the direction of Thailand’s airport business landscape.
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AOT, at this time, appears committed to resolving the dispute constructively. Yet King Power’s position suggests more negotiation lies ahead. Both parties now face the challenge of finding a solution that balances fairness, commercial viability and public interest. The outcome will be closely watched by investors, aviation insiders and of course, the travelling public.
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Further reading:
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