Suvarnabhumi case favours Airports of Thailand

Luc Citrinot

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King Power International Group (Thailand) tells RavenFox.com it is willing to work with Airports of Thailand to amend its contract at Bangkok Suvarnabhumi airport

Airports of Thailand (AOT) has been successful in its legal action against King Power International Group (Thailand) at Bangkok Suvarnabhumi airport, according to local reports. The result could pave the way for AOT to annul or amend the contract with King Power, which has told RavenFox.com that it is awaiting a decision from AOT and is ready to cooperate to make the changes deemed necessary.

The Council of State ruled that King Power had violated the 1992 Public-Private Joint Venture Act by not adhering to procedure when tendering its bid for commercial development at Suvarnabhumi. The law requires that any project with an investment of Bt1bn ($278m) or greater be subject to complicated procedures, which AOT claims did not happen with the airport’s commercial tender. But in October 2006 King Power announced that investment in the airport shopping complex had been around Bt3bn ($99.8m). AOT argued that King Power misstated the level of investment in the complex to avoid the process.

King Power spokesperson Piriyapandh Thaisuryio told RavenFox.com: “We await the decision of the AOT board. However, we insist that we are ready to work with the committee on any issues.”

The close of the case follows several weeks of speculative reports in the Thai press over the future of King Power’s contract. However, local reports today suggest that AOT is eager to work out amendments to the contract rather than annulling it entirely, as had been predicted in some media.

King Power International won the tender for 20,000sq m (215,278sq ft) of retail space in 2004 with the agreement to pay AOT a minimum of Bt1.3bn ($43.3m) yearly. Revenues from sales at Suvarnabhumi airport were expected to reach Bt17.2bn ($477m) in the first year of operation.

In 2006 King Power revenues reached $300m and net profits were just under $20m.