King Power awaits crucial decision in AOT court case

Nophakhun Limsamarnphun

The Nation

The conglomerate, which also operates a city duty-free shopping and entertainment complex and a hotel, acquired a court injunction last November when the previous board of Airports of Thailand (AOT) resolved to terminate its contracts.

The contracts cover 9,000 square metres of duty-free retail space and another 21,000 square metres of commercial space at Suvarnabhumi.

King Power executives said they were treated unfairly by the previous AOT board, which was installed following the September 2006 coup.

King Power chairman Vichai Raksi-arksorn said the outlook had become better since the Samak Sundaravej government came into office and a new AOT board was appointed recently.

"We're returning to plan our business for the third and fourth quarters of this year," he said. "Previously, it was not possible as we were prohibited from doing anything to promote sales.

"Given the fact that we have a new government, we hope to gear up our international sales and marketing campaign to reach this year's target of Bt20 billion in sales.

"The first quarter was on target with sales of about Bt5 billion. The second and third quarters will see lower sales, but the fourth quarter should see a big improvement."

In 2007, King Power's duty-free sales at Suvarnabhumi Airport amounted to Bt12.7 billion.

Besides the legal protection sought after the cancellation of its contracts, King Power filed a lawsuit against AOT seeking compensation of Bt67 billion or else the AOT is required to abide by the contracts which King Power said were signed properly.

At this stage, Vichai hopes the new board of AOT, which is listed on the stock market, will turn to negotiate with King Power and settle the dispute.

Under the terms of two 10-year-long contracts, awarded in 2006 during the tenure of the Thaksin Shinawatra government, King Power is required to pay AOT a 15-per-cent share of its sales revenue - or a minimum of Bt1.4 billion per year.

With duty-free sales totalling Bt12.7 billion, Suvarnabhumi is ranked 11th in the world based on 2006 figures and including Don Mueang Airport operations that year. London Heathrow in the United Kingdom is top, followed by Seoul-Incheon in South Korea, Dubai in the United Arab Emirates and Changi in Singapore. Hong Kong International ranks 10th.