AOT Adjusts Status to Reopen Incoming Duty-Free Shops

We had the opportunity to meet Khun Paweena Jariyathitipong, Governor of Airports of Thailand Public Company Limited (AOT), at PTT Public Company Limited's 48th anniversary event recently. She shared many stories with us as senior members of the press.

She began by emphasizing efforts to increase the number of international passengers entering Thailand through various methods...

These include attracting airlines from different countries to fully utilize Thai airports, cooperating to adjust flight slots (designated times for takeoffs and landings), and progress in considering the reopening of duty-free shops for arriving passengers within AOT airports.

Khun Paweena, or "Khun Na," told us that before proposing this to the Fiscal Policy Office (FPO) of the Ministry of Finance, she conducted passenger surveys at various airports three times, each time receiving the same feedback: passengers want incoming duty-free shops to reopen.

Simultaneously, AOT's studies found incoming duty-free shops essential because they help reduce Thai tourists' spending abroad, and the FPO agreed that AOT could proceed with this initiative.

However, to confirm AOT's position, Khun Na sent a letter to the Ministry of Finance requesting that the Cabinet be informed before AOT moves forward with the next steps.

Regarding the operational format to reopen incoming duty-free shops, there are three main models designed to match passenger needs and space limitations, including:

• Pick-up Counter This model allows Thai passengers to pre-order products before traveling abroad and then collect their purchases at designated pick-up points upon return, providing convenience and a more systematic purchasing process.
• Combining general merchandise with duty-free products This approach arranges for both domestic products—mostly Thai brands—and duty-free goods to be sold in the same area, especially high-demand items like alcoholic beverages and others as regulated by government criteria.
• Selling both taxable and tax-exempt goods This model offers both types of products to increase variety and choices for passengers, with taxable goods managed according to regulations and duty-free items subject to duty-free conditions.

Nonetheless, all three models require detailed consideration of legal, customs tax, distribution methods, and space suitability before clear guidelines are established.

The total value of goods that Thai customers can purchase from duty-free shops remains capped at 20,000 baht. Although duty-free operators have requested for years to raise this limit to 50,000 baht to align with price and inflation changes, this issue has yet to be discussed.

Reports from the FPO indicate that AOT has studied this issue thoroughly, finding that arriving passengers currently lack options to buy incoming duty-free goods at airports as in the past, since the government banned incoming duty-free shops nationwide starting 1 Aug 2024 GMT+7.

This ban has caused duty-free operators and AOT to lose over 4 billion baht annually in revenue combined. AOT alone lost about 1.7 billion baht per year, around 3% of total revenue, affecting profits by approximately 1.3 billion baht or 5-6%.

If incoming duty-free shops reopen this year, AOT's profits are expected to reach as high as 20 billion baht, an 8% increase. Additionally, the rise in flights under the new governor's leadership is likely to strengthen AOT’s position, including stock prices and dividend returns.

International research shows incoming duty-free is widely used, with over 90% of airports worldwide offering such services. The Pick-up Counter model is used in 100% of these cases.

This means Thailand is the only country blocking a service that generates billions annually for airport owners and operators!