Bangkok Airways joins race for duty-free concession at Thai airports amid diversification plans

Bangkok Airways is focussed on diversifying beyond its core aviation business, putting high hopes on restaurants and duty-free retail.

Amid the airline’s ongoing diversification, significant opportunities to expand its retail presence emerged this year when state-owned Airports of Thailand revised restrictions to allow more operators to bid for duty-free and commercial areas at four major airports in the country: Suvarnabhumi, Phuket, Hat Yai and Chiang Mai.

Opportunities for new entrants with single duty-free retailer no longer the model; pictured, Chiang Mai International Airport

To bid for duty-free concession, Bangkok Airways will form a 50:50 joint venture company with Lotte Duty Free Group from South Korea, said the airline’s president Puttipong Prasarttong-Osoth in a Tuesday press briefing.

Bangkok Airways, which already has duty-free stores at its own airports in Koh Samui and Luang Prabang, is among the companies now racing for duty-free concession at the four Thai airports. Other bidders include Central Retail, Minor International, Royal Orchid Sheraton (Thailand) and the long-monopolised King Power Group.

Explaining the airline’s strategy of diversification, Puttipong said: “Over the past three to four years, profits from our core business (airline and airport) gradually declined due to higher cost, changes in customer behaviour and a tough business environment. The company is eyeing non-aviation business.”

According to Puttipong, 70 per cent of the airline’s total revenue of 27.9 billion baht (US$8.7 billion) came from airline and airport business, 15 per cent from catering, ground service and lamp, and 15 per cent from cargo. The airline carried 5.8 million passengers in 2019 and expected to serve more than six million this year.

To increase revenue from non-aviation sectors, the company is planning to open its fourth restaurant in Bangkok this year, next to its French restaurant Brasseries 9 in Sathon. The airline entered into the restaurant business a few years ago and today operates three outlets serving up different cuisines including Lebanese, French and Indian food.

All existing outlets contributed revenue of 93 million baht in 2018. Income is expected to climb to 120 million this year.

Our catering unit has long been forayed in the food business to capitalise the income generation opportunities in the sector, said Puttipong.

Besides the duty-free and food business, the airline chief said the group is doing a feasibility study on airport facilities in an ‘aero town’ project located at U-Tapao Airport in Rayong province in the east and a new airport project in Phang Nga province in the south.

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