Airports of Thailand (AOT) shares fell 7.8% on Friday following an announcement by Thai duty-free retailer King Power that it intends to shutter its stores in Phuket, Chiang Mai and Hat Yai airports, pointing to the steadily declining economy and heightened rental fees.
The SET-listed AOT, which operates six international airports across Thailand, acknowledged on Friday that King Power had submitted a memo to its president last month requesting discussions to end its contracts to operate duty free retail spaces at Phuket Airport, Chiang Mai Airport and Hat Yai Airport.
The request cited impacts from the coronavirus pandemic, which was followed by circumstances such as the trade war between the United States and China, heightened tariffs and a significant reduction in Chinese tourist arrivals.
The duty-free retail giant also pointed out that the Covid situation prompted the AOT to increase its revenue sharing per head rate to 127.30 baht per traveller.
A total of seven unforeseen matters were outlined by the retailer as having critically affected its ability to turn a profit and had made the AOT's fees no longer reasonable.
Among the seven issues was an apparent deviation from the terms of reference in the contract between King Power and AOT due to a government policy shift in 2024, duty reductions for wine, a lack of proactive state measures to bolster confidence for Chinese tourists, and a general downturn in overall tourism.
Admitting to a lack of confidence in persisting at the three terminals, King Power asked that a conclusion be reached on its request within 45 days of its submission.
While the company awaits a decision by AOT, it said it will only be paying 20% of its contractual rate from sales.
The AOT shares plummet in the morning sesssion on Friday. (Screenshot)
The announcement wiped 36 billion baht from AOT's stock value by Friday afternoon. The airport operator has lost 50% of its value since the start of the year and is currently at its lowest valuation in a decade.
