Thailand's King Power loses retail bid in U-Tapao airport concession

[webfact]

Thailand's King Power loses retail bid in U-Tapao airport concession

 

FILE PHOTO: A woman walks past the King power logo at its headquarters in Bangkok, Thailand, June 14, 2016. REUTERS/Athit Perawongmetha 

 

BANGKOK (Reuters) - Thailand's Central Group and DFS Venture Singapore snapped up retail and services concession at an upcoming airport in the eastern province of Rayong, a government official said on Monday, beating out duty-free giant King Power.

 

The announcement underlines the challenges King Power is facing as its dominance of the lucrative Thai duty-free and travel retail industry comes under scrutiny, at a time when it is also trying to recover from the recent death of its chairman, Vichai Srivaddhanaprabha, in a helicopter crash.

 

"Central Group won the retail and services auction while King Power won the bid for duty-free," Vice Admiral Luechai Sri-eamgool, director of U-Tapao International Airport, said.

 

U-Tapao is the first airport in Thailand to hold an auction with multiple concessions, splitting up duty free and retail operations. Up until now, King Power has enjoyed near monopoly, being a sole operator with concessions in all major airports.

 

King Power's most lucrative franchise in Thailand's main international airport is under a single license that is set to expire in 2020. Auctions for concessions at Suvarnabhumi are slated to take place later this year.

 

Airports of Thailand Pcl <AOT.BK>, a state-owned firm that grants the concessions at major airports including Suvarnabhumi, may consider multiple concessions at the auction, analysts say, increasing competition among retailers.

 

Tourism is booming in Thailand, which received nearly 35 million visitors last year, most funnelled through the airports where King Power is ubiquitous. But public debate has increased over the single duty-free operator structure.

 

Bidders in the U-Tapao concession included Thailand's Minor International <MINT.BK> and Korea's Lotte Duty Free <004990.KS>.

 

Under the 10-year concessions for retail, service and duty free at U-Tapao, operators must share at least 15 percent of their revenue with the government or the minimum guaranteed amount, whichever is higher, Vice Admiral Luechai said.

 

"The results will be submitted to the defence minister for approval with commercial activity to begin February 2018."

 

King Power, which owns Leicester City football club, did not immediately respond to a request for comment from Reuters.

 

Yuwadee Chirathivat, chairman of Central Department Store, Central Group's largest unit, said the consortium "was delighted" that the winning bidder would also be responsible for counters where tourists can pick up duty-free items bought outside the airport.

 

While U-Tapao is smaller than Suvarnabhumi and Don Muang airports, upgrading the Vietnam War-era airport is at the centre of the government's industrial policy in the east.

 

It remains a quiet airport with weekly international flights mainly to China, its website shows.

 

Bidding for a $6.8 billion high-speed rail project to link Suvarnabhumi, Don Muang and U-Tapao is underway.

 

(Reporting by Panarat Thepgumpanat and Chayut Setboonsarng; Editing by Kanupriya Kapoor and Himani Sarkar)

 

-- © Copyright Reuters 2018-11-20

[Colabamumbai]

Time to end the monopoly.

[Oxx]

So, duty free remains a King Power monopoly throughout Thailand.  Pity.

[Phuketshrew]

3 hours ago, webfact said:

Airports of Thailand Pcl <AOT.BK>, a state-owned firm that grants the concessions at major airports including Suvarnabhumi, may consider multiple concessions at the auction, analysts say, increasing competition among retailers.

Shouldn't that read "increasing the number of brown envelopes" ?

[overherebc]

31 minutes ago, Oxx said:

So, duty free remains a King Power monopoly throughout Thailand.  Pity.

Meaning 99% of everything will still be more expensive than buying locally, same as many duty free outlets at most airports around the world.

[Penicillin]

39 minutes ago, overherebc said:

Meaning 99% of everything will still be more expensive than buying locally, same as many duty free outlets at most airports around the world.

Check again , I think you may be off by 1%

[Orton Rd]

52 minutes ago, overherebc said:

Meaning 99% of everything will still be more expensive than buying locally, same as many duty free outlets at most airports around the world.

'Duty free' is the biggest travel scam

[CLW]

'Duty free' is the biggest travel scam

Not necessarily but most of it is a scam.
Cigarettes are really cheaper.
Alcohol sometimes if they have promotion but you need to look very careful for the contents of the bottle and compare the prices.
Can you make a tax refund from duty free items?
Maybe then it could be a bit cheaper as well...

[Sydebolle]

That went fast than I thought ....... lets see what happens with Swampy's licensing which is up in two years or so! 

[overherebc]

7 minutes ago, CLW said:

Not necessarily but most of it is a scam.
Cigarettes are really cheaper.
Alcohol sometimes if they have promotion but you need to look very careful for the contents of the bottle and compare the prices.
Can you make a tax refund from duty free items?
Maybe then it could be a bit cheaper as well...

If it's already tax free ??????

[CanuckThai]

"results will be submitted to the defense minister for approval"  This is interesting...a defense minister to approve an airport concession.  How sweet it is....

[pmh2009]

40 minutes ago, CanuckThai said:

"results will be submitted to the defense minister for approval"  This is interesting...a defense minister to approve an airport concession.  How sweet it is....

a real military government!

[Somtamnication]

"The results will be submitted to the defence minister for approval with commercial activity to begin February 2018."

Defence? Arai wa?  Bizarre!!!!

[Oxx]

42 minutes ago, CanuckThai said:

"results will be submitted to the defense minister for approval"  This is interesting...a defense minister to approve an airport concession.  How sweet it is....

 

Not really interesting.  U-Tapao is a military airport*.  For such a large contract one would expect the head of the military to approve.

 

 

* Being more precise, U-Tapao International Airport is a joint civil–military public airport.

[hotchilli]

5 hours ago, Oxx said:

So, duty free remains a King Power monopoly throughout Thailand.  Pity.

Times are a changing... the monopoly has been dented, no more "it's yours" for the taking attitude

transparency now dictates an open bidding system where most have a fair chance of winning, but then again the final bid is chosen behind closed doors with little explanation why they won !

 

[DrTuner]

Good. The two winners aren't great either but at least it's not a complete monopoly. 

[greeneking]

9 hours ago, overherebc said:

Meaning 99% of everything will still be more expensive than buying locally, same as many duty free outlets at most airports around the world.

Yes. Instead of fighting for 'lucrative' concessions why can't they just compete for sensible concessions that do not rip off the customers.

Do not tell me they can choose - they can not. Only choose not to buy at all.

[zzaa09]

11 hours ago, Colabamumbai said:

Time to end the monopoly.

Across the board - not just as such applies to duty free mafia.

[Older and Wiser]

11 hours ago, Phuketshrew said:

Shouldn't that read "increasing the number of brown envelopes" ?

Monpoly = fat profits, big cut for the government, big backhanders, poor deal for the customer.

Multiple Concessions = lower profits, lower cut for government, smaller backhanders, competitive prices and good deal for the customers. 

Which of those two options do think most likely?

Never shopped in King Power DFS, ridiculously over-priced; 22 quid for a bag of Quality Street. On your bike!

[zzaa09]

Yet, isn't controlling corporatism the universal way of the world. 

 

And real critique is nowhere to be found. 

 

 

[kickstart]

9 hours ago, CanuckThai said:

"results will be submitted to the defense minister for approval"  This is interesting...a defense minister to approve an airport concession.  How sweet it is....

And a Vice Admiral an airport director did not know ships could fly.