Airports of Thailand (AOT) saw its shares fall by 7.8% on Friday following an announcement by Thai duty-free giant King Power that it intends to shut down its retail outlets at Phuket, Chiang Mai, and Hat Yai airports.
The retailer cited Thailand’s sluggish economy and rising rental fees as primary reasons behind the decision.
AOT, a SET-listed firm operating six international airports nationwide, confirmed that King Power had submitted a memo to the company’s president last month. The letter requested discussions to terminate contracts for duty-free operations at the three airports.
King Power pointed to lingering effects from the Covid-19 pandemic, followed by global economic challenges such as the U.S.-China trade war, heightened tariffs, and a significant drop in Chinese tourist arrivals.
The company also highlighted that during the pandemic, AOT raised the per-passenger revenue-sharing rate to 127.30 baht, further impacting its profitability.
In total, King Power outlined seven unforeseen challenges that it says have critically undermined its business model.
These included deviations from contract terms due to a policy change in 2024, reduced import duties on wine, a lack of strong government measures to restore Chinese tourist confidence, and a general tourism downturn.
Citing a lack of confidence in its ability to continue operating profitably, the retailer asked AOT to respond to its request within 45 days of submission.
In the interim, King Power said it would only pay 20% of its contractual obligations based on sales revenue.
The announcement triggered a sharp market reaction, erasing 36 billion baht from AOT’s market value by Friday afternoon. The company’s stock has now lost 50% of its value since the beginning of the year, falling to its lowest point in a decade.
