King Power International doubles Suvarnabhumi space

Emily Pacey

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The retailer has expanded its duty-free space to almost twice that originally allotted to it by Airports of Thailand as the new Bangkok Suvarnabhumi airport prepares for inauguration later this month

King Power International Group (Thailand) has expanded its total retail space at the new Suvarnabhumi airport beyond the 20,000sq m (215,278sq ft) stipulated in its contract with Airports of Thailand (AoT).

Suvarnabhumi airport general manager Somchai Sawasdeepon said he believed King Power would now control 28,000sq m (301,389sq ft) of commercial space, including about 9,000sq m (96,875sq ft) of duty-free retail, nearly twice the 5,000sq m (53,819sq ft) originally planned.

Local reports suggest that King Power's expansion has angered other bidders for the ten-year, Bt7.5bn ($200m) retail contract. They claim that their bids set compensation rates based on the assumption that only 20,000sq m was available, leaving them at a disadvantage in the bidding process.

AoT insists it planned to negotiate additional charges with King Power to cover the new space. Under the terms of the concession, the retailer is obliged to pay Bt1.2bn ($32m) for its duty-free space and Bt1.43bn ($38m) for the remaining commercial space in its first year. King Power must also pay rent of Bt500-700 ($13-$18) per square metre to the airport authority every month.

Sawasdeepon told local reporters: "Any extra charges will have to be based on sales and service revenue, while the lease rates are already fixed."

AoT will carry out a full survey to discover exactly how much space the retailer is using once work on the airport, due to open on September 28, is complete.

King Power has indicated that 95% of its shops will be open on September 28, although the Chanel and Hermès boutiques would take another year to complete.

To coincide with opening of the airport facilities, the company plans to launch a "Suvarnabhumi cash card", intended to make it easier to shop.

Created in association with Siam Commercial Bank, the retailer will introduce two types of card: a purple one worth Bt3,000 ($80) and a gold card worth Bt50,000 ($1,330).

If the full balance is not used in one trip, card users can choose to save the card for future use or be reimbursed the remaining credit. The cards will be valid for three years.

King Power expects sales in 2007 to reach Bt30bn ($800m) at its Si Ayutthaya Road downtown store and Suvarnabhumi airport operation. The company posted sales of Bt12.65bn ($336.8m) in 2005.

However King Power did not escape the fallout from the recent security scare at the world's airports, suffering a fall in liquor and fragrance sales.

Sales in the two categories fell by Bt100-150m ($2.7-4m) in the month after the uncovering of the alleged terror plot in the UK.