Airports in North America have been devastated by the COVID-19 pandemic, and their tenant partners are equally feeling the strain. While airports, airlines and concessionaires have all appealed to government officials for aid, some solutions will come from within.
Airport concessions in the United States is estimated to be a $10 billion industry. Two trade groups representing concessionaires – the Airport Restaurant & Retail Association and the Airport Minority Advisory Council – say their concessions businesses collectively contribute $2.5 billion to airport revenue streams annually. Together these businesses employ more than 125,000 workers in U.S. airports.
Earlier this week, ARRA Board President Patrick Murray told AXN that sales had plummeted by well over 50 percent with no signs of stopping.
Both groups have appealed to both airports and the federal government for relief. Below is a sampling of the actions taken by select airports to ease the way forward for their concessionaire partners.
• The city of Atlanta suspended the minimum annual guarantee payment obligation for concessionaires and rental car companies at Hartsfield-Jackson Atlanta International Airport (ATL) for a four-month period ending June 20. The city may extend the action for an additional 30-day period, “if the COVID-19 pandemic is still active and it is in the best interest of the city.” Once the emergency rental payment term expires, concessionaires will be required to resume normal rental payments.
• Dallas/Fort Worth International Airport (DFW) moved to ease pressures on duty free operators as early as the first week of March when it eliminated the minimum annual guarantee required in those contracts. Since then, AXN has learned the airport has altered at least some other leases. DFW issued this statement: “With the impacts to flights and passenger movement, DFW Airport is working with partners to identify what services and concessions options can and should continue to serve our customers during this time. We are assessing options to help our partners, including allowing them to pay a percentage of sales versus the minimum annual guarantee rent through the fiscal year ending September 30, 2020. We are communicating regularly with our partners to ensure the safety of both their customers and employees.”
• Denver International Airport (DEN) is eliminating the minimum guarantee requirement and instead collecting the percentage rent based on total monthly sales, an airport spokesperson said. The airport is also allowing concessionaires to reduce their hours or close, for those who feel it is not viable to stay open. “While each concession is facing a unique situation based on their own financials, we are focused on policies that are fair and available to all concessions,” spokesperson Emily Williams said in an email. “For our SBE and MWBE partners, we are working closely with Denver Economic Development and Opportunity to connect them to small business loans and grants.”
• Detroit Metropolitan Airport (DTW), in compliance with Governor Gretchen Whitmer’s executive order, has temporarily suspended operations at all bars and spas within the McNamara and North Terminals. Restaurants are restricted to offering carry-out only, and are required to limit to five the number of people present at one time to pick up their food and beverage orders, while staying six feet away from others. Hours of operation for restaurants are being determined by the availability of staff and passenger demand. Retail operators may stay open or close at their discretion. Aid to concessionaires could come in the future. “Due to the ever-changing nature of the COVID-19 pandemic, the financial relief WCAA may be able to provide to concessionaires has yet to be determined,” the airport said by email. “WCAA’s Concessions & Quality Assurance department is communicating daily with our concessionaires and will continue to do so as the situation evolves.”
• Miami International Airport (MIA) has allowed concessionaires to temporarily close some locations or reduce their hours of operation – and in the case of dining locations, reduce their menus – while still maintaining concession service in each our concourses for the reduced numbers of passengers traveling. MIA spokesman Greg Chin said the airport is considering various forms of relief for the concessionaires and are taking into consideration how similar airports are responding. Ultimately, any recommendation by the Aviation Department must be approved by Miami-Dade County Mayor Carlos Gimenez and the Board of County Commissioners before it can be implemented.
• Staff at Minneapolis-St. Paul International Airport (MSP) has been authorized by the Metropolitan Airports Commission to “evaluate and, if in the best interest of the Commission, grant full or partial waivers of minimum annual guarantees for the period March 1, 2020, through June 30, 2020, for any or all parties operating under concession agreements with the MAC.” Patrick Hogan, director, strategic communications for the MAC, said earlier this week that officials are in the process of developing eligibility parameters for relief, marking the first step in deciding to whom such waivers will apply and the amount that will be waived.
• Bars at Orlando International Airport (MCO) are required to halt sales of alcoholic beverages, in line with an order from Mayor Buddy Dyer that applies throughout the city. Per an executive order by Florida Governor Ron DeSantis, restaurants can sell alcohol for on-site consumption but must limit their occupancy to 50 percent of current building occupancy, ensure at least a 6-foot distance between any groups of patrons and limit parties to no more than 10. MCO said other concessionaires, including shops and food vendors, “continue to work with Orlando International leaders to determine possibly changing operating hours or suspending service as a result of a decrease in passenger demand.”
• Philadelphia International Airport (PHL) is “in the process of assessing the complex COVID-19 situation, while interpreting and complying with multiple competing mandates from various governmental entities,” an airport spokesperson said. The airport’s website notes that “the more than 170 PHL food & shops will right-size their terminal offerings to accommodate adjusted passenger volume levels. Food, drinks and travel essentials will continue to be available within each terminal.” The website lists 24 concessions locations open through Monday, March 30, and notes that other may be open at the operator’s discretion.
• Portland International Airport (PDX) has eliminated minimum annual guarantees for food and beverage, retail and terminal services, switching to a percentage of sales rent only “for the time being,” airport spokesperson Kama Simonds said. PDX is also allowing adjusted hours at the operators’ discretion. Airport sit-down restaurants have closed in compliance with a statewide order, but counter-service restaurants, grab-and-go services and coffee stands are considered takeout and can remain open. Several specialty retail stores in the airport have closed.
• San Francisco International Airport (SFO) is offering the forbearance of rent and fees to concessionaires, according to public information officer Doug Yakel. Earlier this week, the Airport Commission approved a lease modification for the airport’s duty-free operator, DFS Group, to allow a temporary suspension of the minimum annual guarantee and an adjustment of the base rent calculation for the remainder of this year.
• At Seattle-Tacoma International Airport (SEA), airport officials are “in close communication with tenants during this evolving crisis and reviewing opportunities to allay the negative impacts to their bottom lines,” the airport says. At least 15 concessions locations have closed temporarily. SEA said most airport dining and retail tenants are open for business but with reduced operating hours and food service. Restaurants are limited to grab-and-go and food orders to-go.
• The Metropolitan Washington Airports Authority, which operates Washington Dulles International Airport (IAD) and Ronald Reagan Washington National Airport (DCA) is talking daily with concessionaires to support them through the challenging time, according to MWAA spokeperson Robert Yingling. “We have presented them with a variety of operating options to allow them to determine individually what works best for their businesses,” Yingling said. “We will continue working one-on-one with them as the situation evolves.”
This is by no means an exhaustive list. Many other airports are working with their concessionaire partners to find a way forward. AXN will continue to report on lease and operational changes in the weeks ahead.
