King Power to pay AOT Bt700m more

King Power holds a 10-year concession from AOT to operate duty-free shops and manage commercial retail space at Suvarnabhumi Airport. The original terms called for commercial space to be limited to 20,000 square metres across clearly stipulated locations.

Under the concession, King Power is obligated to pay Bt1.2 billion in the first year for its duty-free space and another Bt1.43 billion for commercial space. Payments for subsequent years are based on 15 per cent of sales revenue, with a minimum of Bt1.4 billion.

Serirat Prasutanond, acting president of AOT, did not confirm the additional figure, but said the board would be asked to approve the agreement so that AOT could book the revenue in the 2008 fiscal year, which ends in September. He is positive that if things go as planned, AOT's financial results would sharply increase from last year when net profit was Bt1.09 billion.

In the third quarter from April to June, AOT's net profit jumped 1,000 per cent to Bt3.6 billion from Bt330 million in the same period last year due to the realisation of King Power's concession fees of Bt3.8 billion.

The previous board of directors, chaired by General Saprang Kalayanamitr, was at odds with King Power. The board in March last year decided to cancel the two contracts with King Power, citing they were signed during the Thaksin government, in violation of the Public/Private Joint Venture Act. It also evicted King Power from the airport.

King Power retaliated, by filing civil lawsuits against AOT, seeking compensation of nearly Bt70 billion. The Civil Court issued an injunction for King Power to continue its business at the airport.

Sources at AOT said the new board, chaired by Vudhibhandhu Vichairatana, which took over following the formation of the People Power Party-led coalition government, had decided to reach a negotiated settlement with King Power.

A source at King Power said if AOT agrees to let the contracts continue, it will withdraw its lawsuits.