Thailand: TRA pushes again for duty-free split

• Feb 22, 2019

A group of retailers has repeated its call for the government to split the duty-free shop concession at Suvarnabhumi airport. 
Worawoot Ounjai, president of the Thai Retailers Association (TRA), said the association stands by its position that there should no longer be a master concession for operating duty-free business at the country’s gateway airport. 
Airports of Thailand Plc (AoT) administers duty-free for both Suvarnabhumi and Don Mueang airports as a master concession that is considered a de facto monopoly. 
“We [TRA members] favour multiple duty-free concessions instead of the master concession,” Mr Worawoot said. “The concession at Suvarnabhumi airport should be split into at least four contracts. The terms of reference, in addition, should not give too much weight to technological merits as in the past. They should focus on the benefits that AoT could get. The duty-free agreement should span 5-7 years.” 
He said the terms that combine duty-free stores at Suvarnabhumi airport with three provincial airports of Chiang Mai, Hat Yai and Phuket are inappropriate because each airport has different layouts. 
Nonetheless, combining the three provincial airports under a single master concession is acceptable, Mr Worawoot said. 
“Given Suvarnabhumi airport’s large space of 12,000-15,000 square metres, the duty-free shop concession there should be divided into smaller contracts based on four product categories: cosmetics and perfume; fashion apparel; liquor and tobacco; and electrical appliances in lieu of the master concession format,” he said. 
Mr Worawoot said a concession by category should not be difficult to manage, if AoT has good advance management and allots the retail space to each category appropriate to the terminal’s physical space and passenger flow. 
“Concession by category will be easy to operate, as operators themselves have expertise in each product category and could offer a greater variety to tourists,” he said. 
According to Mr Worawoot, AoT’s performance based on operating results was lower than that of other countries that have concessions by category, such as South Korea, Japan, Hong Kong and Singapore. 
If AoT’s management shifts to the concession-by-category system, the average concession fees earned could be over 30-40% as is standard internationally, compared with 15-18% earned under the existing system, he said. 
Mr Worawoot said the multiple concession system would result in higher sales, as tourists are likely to purchase more products given the variety. This could put as much as 50 billion baht into the country each year, he said. 
In addition, the association urged AoT to operate the duty-free pickup counters for fair competition. 
“The TRA will continue observing the bidding process [for duty-free shops], including details of the terms of reference as well as transparency, fairness and accountability of the procedures,” Mr Worawoot said. “The TRA is committed to supporting national interests whatever the bidding results are.” 

Source: https://www.bangkokpost.com/news/transport/1632962/tra-pushes-again-for-duty-free-split