King Power International Co is seeking a court injunction to maintain its business operations at Suvarnabhumi despite Airports of Thailand's (AOT) nullification of its contracts.

Meanwhile, commercial shops at the airport are scrambling for clarity over their future.

Vichai Raksri-aksorn, chairman of King Power, said he was awaiting official notification of the nullification from the AOT and would then ask the Administrative Court for an injunction.

He also insisted that King Power had complied with all conditions set by the previous AOT board of directors and that the company had paid the AOT Bt4 billion as up-front revenue-sharing.

AOT's board of directors on Thursday resolved to nullify the two contracts for King Power to operate the duty-free and manage the commercial area at the airport, saying the contracts were "illegal" as they should have been subject to the Public-Private Joint Venture Act that required more extensive screening.

With an investment of Bt7.5 billion, King Power Suvarnabhumi was billed as "the longest walk-through shopping street in the world".

With thousands of world-famous products, it expects to earn Bt17.2 billion in revenues after just one year of operation.

Vichai did not say if he would sue the AOT for its change of heart, as the previous board chaired by Srisook Chandrangsu had told King Power that its contracts need not come under the act.

However, the current board, chaired by General Saprang Kalayanamitr, considered that King Power had deliberately brought down the projects' values to avoid complying with the act.

Transport Minister Theera Haocharoen said: "This is a sensitive issue, but we have followed the legal process through, and we're not cheating anyone. [King Power] has the right to file a lawsuit if it wants to. The ministry will assign the Attorney-General's Office and the legal team to see how to handle it."

Theera said he was also waiting for the written document from the AOT concerning the contract nullification before deciding if the issue would be forwarded to the Cabinet for consideration.

Meanwhile he noted that the AOT would need to open bids to find new concessionaires.

"King Power is entitled to join the bidding, but it will need to obey the law," Theera added.

A source at AOT said retailers at Suvarnabhumi, though operating as usual yesterday, were confused about whether the nullification would affect contracts between King Power and themselves.

"Chanel, Gucci, Prada and Hermes have invested over Bt100 million in their shops at Suvarnabhumi and are confused by the government's policies," the source said.

Vorravit Siripak, marketing director of Puri Co, which manufactures luxury spa products, said King Power had not notified the company of any possible change in the space-leasing contract.

He said Puri had been a tenant of King Power for two years, back to when Don Muang Airport was still fully operative, and had always had a very good impression of the way King Power ran the commercial area.

He expected both parties to carefully find the best way out because any wrong decision would severely damage the airport's image and the sales contribution of all tenants.

The company has five sales counters at the airport, which contribute approximately 30 per cent of its total sales. Accumulated sales there are higher than at Puri's other branches in the city centre.

Pacharee Wisutiwa, vice president of operations at S&P Syndicate Plc, which has opened a 200-square-metre restaurant on the third floor of the passenger terminal, said the company was waiting for a clear agreement between the AOT and King Power on the overall retail contract at the airport.

"We are open as normal as we are concerned for our customers travelling through the airport and don't want the change to have any effect on their convenience," she said.

Kannika Chinprasithchai, the marketing manager for Black Canyon (Thailand) Co, said King Power had not notified the company of any possible changes.

She said Black Canyon had yesterday contacted King Power but there had been no clear answer on what steps would be taken. She was also informed that King Power had not yet been officially notified of the nullification.

Black Canyon operates three Cafe Nero outlets at Suvarnabhumi, covering a total area of 500 square metres. While waiting for official notification from King Power, all the three shops are operating as usual.

"The shops will remain open, and we expect to continue business, but if AOT takes over the management, we are ready to obey the regulations," Kannika said.

Prakarn Tawisuwan, senior executive vice president of TMB Bank, said the bank had to wait for more information before it could decide what to do.

However, he believes there will not be much impact on the bank's earnings as TMB branches in the airport are not very profitable. The bank originally expected its airport branches to support its image.

Business Reporters

The Nation