BANGKOK – Airports of Thailand Public Company Limited (AOT) announced on July 30 that King Power Duty Free (KPD), the largest operator of arrivals duty-free shops in Thailand, will cease operations at five AOT airports: Suvarnabhumi, Phuket, Chiang Mai, Hat Yai, and Don Mueang, starting August 1, 2024.
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This decision follows a resolution by the Cabinet of Thailand on November 28, 2023, and July 2, 2024, to cancel the permission to establish bonded warehouses for arrivals duty-free shops, as well as the exemption of taxes on goods purchased from these shops for inbound passengers. This move aims to stimulate domestic consumption and spending.
Impact on AOT
The closure of King Power’s arrivals duty-free shops will inevitably impact AOT’s revenue. It is estimated that AOT will experience a monthly decrease of approximately 1.70 million baht in rental income and a further reduction of about 141.42 million baht per month in minimum guaranteed returns.
However, AOT has prepared for this situation and has plans to increase revenue from other commercial activities to compensate for the loss.
New Direction for Duty-Free in Thailand
This change marks a significant turning point for the duty-free industry in Thailand. The government aims to encourage domestic spending and promote inbound passengers to purchase goods from duty-free shops within the country rather than abroad.
King Power Duty Free has expressed its willingness to cooperate with the Customs Department in implementing the Cabinet’s resolution and has notified AOT of the cessation of its arrivals duty-free operations at various locations.
The Future of Duty-Free Business
Although the closure of King Power’s arrivals duty-free shops brings about significant changes in the industry, it also presents an opportunity for other operators to fill the market gap and offer products and services that cater to the needs of consumers in the new era.
The end of an era for King Power’s arrivals duty-free marks a significant shift in Thailand’s duty-free landscape, impacting both AOT and other operators. However, this could be an opportunity for adaptation and development of businesses to align with government policies and meet the evolving demands of consumers.
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