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New bids for duty-free shops

BackApr 20, 2007

AOT board says it wants 2-3 firms at Suvarnabhumi instead of just King Power

The Airports of Thailand board called yesterday for a fresh round of bidding for the duty-free concession at Suvarnabhumi Airport, signalling a final end to its contract with current operator King Power International.

AOT directors also resolved to have all retail tenants at the terminal strike new leases with AOT individually, after the previous board meeting terminated the commercial-area management concession for King Power.

Chirmsak Pinthong, an independent director and spokesman for AOT, said the board preferred to have two or three companies manage the airport's duty-free shops.

"We want to have more than one operator, to prevent a monopoly," he explained.

King Power International could still participate in the new bidding.

The board earlier terminated King Power's two concessions on the grounds that they were improper, after the Council of State ruled King Power had intentionally skirted the Public-Private Joint Venture Act.

Although the value of the contracts was well over Bt1 billion - the level requiring stricter screening - King Power was alleged to have brought the value down, which meant only the board's approval was needed for its winning bid.

King Power insists it followed all regulations and had asked the previous AOT board whether the contracts must conform to the Joint Venture Act.

The previous board, chaired by Srisook Chandrangsu, had said that since the total value of the contracts was lower than Bt1 billion, they were not required by law to be reviewed.

Despite the board's decision, AOT has yet to notify the firm officially of its decision. King Power has said it has not received any official notice on the terminations so far.

Chirmsak said yesterday's board resolution would not proceed until King Power receives the official notice. "Now, the prosecutors are preparing the notice," he said.

King Power might seek an Administrative Court injunction against the cancellation of the concessions, but AOT believed it would win the case, because the decision was made legally under the full authority of the board, he said.

AOT would also review the revenue-sharing formula for the concessions. King Power might have to pay extra if the formula was changed, because AOT was yet to receive any revenues, estimated at Bt4 billion.

"How much the benefits from the new contracts should be will have to be recalculated," Chirmsak said.

The board's move was aimed at creating fair competition for investors, ensuring convenience for passengers, providing acceptable prices at the airport, returning reasonable revenues to AOT and safeguarding AOT's reputation, he said.


Source: The Nation by Watcharapong Thongrung
Friday, April 20, 2007