THAILAND. Arrivals duty-free shops across the country will close from 1 August in line with a recent edict from the Ministry of Finance to eliminate the channel and revoke travel retailers’ associated licences.
As reported, the move is designed to encourage local market spending by visitors. Arrivals duty-free shops exist at eight international airports – Suvarnabhumi and Don Mueang in Bangkok, Chiang Mai, Phuket, Hat Yai, U-tapao, Samui and Krabi
The closures will mean an approximate -20% drop in airport duty-free sales for larger spirits houses, The Moodie Davitt Report can confirm. Citing Thai Customs, Bangkok Post said airport arrivals duty-free sales reached THB3.02 billion (US$82 million) in 2023.
The news does not affect land border shops, Jaidee Duty Free Founder Lukas Coates confirmed to The Moodie Davitt Report.
As reported, Jaidee Duty Free runs a trio of land border duty-free stores in traditionally high international passenger traffic locations along the Mekong River region – on Thailand’s borders with Cambodia, Laos and Myanmar.
The current arrivals shop duty-free allowance is one litre of alcohol, 200 cigarettes and up to 250 grams each of cigars or tobacco.
An Airports of Thailand (AOT) Board meeting held today (30 July) resolved to approve the cessation of King Power Duty Free’s operation of bonded warehouses serving arrivals shops at Suvarnabhumi, Don Mueang, Phuket, Hat Yai and Chiang Mai airports, effective 1 August.
The closure follows King Power Duty Free’s agreement to collaborate with Thai Customs in closing the arrivals shops at Suvarnabhumi Airport (approximately 1,870.69sq m); Phuket, Chiang Mai and Hat Yai International Airport (each 217.45sq m); and Don Mueang (162.46sq m) in line with the Cabinet resolution.
However, AOT said in line with King Power Duty Free’s original concession terms, the retailer’s payments will decrease as a result of the reduced store numbers.
Therefore, AOT expects a decline of approximately THB1.70 million (US$47,240) per month in revenue from office and state property rent at Suvarnabhumi, Phuket, Chiang Mai and Hat Yai airports.
More significantly, the authority projects a decrease in monthly minimum guarantees of approximately THB126.25 million (US$3.51 million) during the contract period 2024-2025 at Suvarnabhumi; approximately THB8.41 million (US$234,000) at Phuket, Chiang Mai and Hat Yai; and around THB6.96 million (US$193,000) at Don Mueang.
“To further make up for such revenue decline, AOT has already prepared projects to increase revenue from other commercial activities,” the company said.
Double blow
As revealed by The Moodie Davitt Report, the news follows hot on the heels of an announcement that AOT is to reclaim some 1,400sq m of space at Suvarnabhumi Airport in Bangkok and 491sq m at Phuket International from King Power and three government agencies (Immigration Bureau, Thai Customs Department and Revenue Department) to enhance basic operational facilities.
Again, King Power’s rental terms are being adjusted accordingly. ✈
