The state-owned Airports of Thailand (AOT) needs to liberalise its duty free business at Suvarnabhumi and Don Mueang airports when the existing concession contracts awarded to King Power Group are to expire in 2020 and 2022 respectively.
The suggestion for AOT to liberalise duty free shop business was made by academics when they debated duty free shop business now monopolised by King Power Group after it was awarded concession contracts to operate duty free shop business by AOT at three airports–Phuket, Suvarnabhumi and Don Mueang–and downtown since 2005.
They said liberlisation of duty free business from the existing concession contract to sole operator, to multiple concessions based on category and location, will generate more revenues to the state, and enable competitiveness of Thai airports to other airports in the region such as Incheon airport in South Korea.
Besides, it will offer passengers a wide variety of goods at duty free shops.
Chulalongkorn University’s economist Nualnoi Treerat told a seminar on Thursday (March 8) that existing term of reference (ToR) allows only one concessionaire to operate airport, downtown and pickup counter duty free for over 10 years, thus making it less competitive in term of a variety of goods, as it is monopolised by one operator.
She said other airports such as Incheon awarded duty free shop contracts to 6-7 operators based on category and location and each was given only 5-6 years.
Although Incheon and Suvarnabhumi have almost the same amount of passengers, Incheon generated revenue to the state 6 times higher than Suvarnabhumi, Ms Nualnoi said.
Deunden Nikomborirak, a research director on economic governance at Thailand Development Research Institute (TDRI) also shared the same view. She suggested AOT to amend its ToR in calling new bid for duty free shop business after King Power Group’s concession contracts expire in 2020 and 2022 respectively.
She agreed that multiple concession contracts system would benefit the state more than sole concession contract.
Ms Deunden also suggested transparent selection process of tenders by having other agencies, such as the State Enterprise Policy Committee, the Ministry of Finance, and the Ministry of Transport, to take part in the selection process, instead of giving the AOT’s board of directors to handle alone.
This would enable fair competition in the bidding, she said.
Thai Retailers Association director Chatchai Tuangrattanapan also voiced support for duty free liberalisation saying this would attract Thais to pay 15-30% more on duty free goods in the country or US$ 320-640 million a year or generated up to 47-58 billion baht more revenue to the state.
He recalled recent Skytrax’s survey of airport duty free shopping which showed Suvarnabhumi received scores 4, lower than Singapore, Hong Kong, Korea and Japan in term of convenience.
He said all these airports operated on multiple concessions based on category and location.