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Survival And Revival: Concessionaires Press Airports For Relief

With a goal of “survival and revival,” the Airport Minority Advisory Council (AMAC) and the Airport Restaurant & Retail Association (ARRA) called on airports to share in the $10 billion in relief money coming from the federal government in the coming weeks. The U.S. Congress and the Trump Administration on Wednesday agreed to the aid for airports as part of a $2 trillion stimulus package as the country attempts to ward off economic collapse while the COVID-19 pandemic persists.

In a call involving more than 500 concessionaires, airports and other interested individuals, the two trade groups held a joint panel discussion on the need for concessionaires to work with airport partners to ensure some of that money funnels to relief for concessionaires.

“This is a catastrophic event of monumental proportions, and that is no hyperbole,” said Judy Byrd, vice chair of ARRA. “Regardless of size – the smallest of companies to the largest of companies – what we are experiencing now is unsustainable. We also realize the duration remains a big unknown, as does a potential recurrence of this virus should it abate. What happens in that case?”

Noting that individual airports have already taken steps to ease payment requirements from concessionaires, including elimination of minimum annual guarantees and more flexible store hours at many airports, Byrd said she is encouraged but also stressed that the industry needs more.

“We recognize that there have been early steps taken by airports to address this issue,” she said. “We appreciate that and we’re encouraged by that – it signals that this is going to be a collaborative effort by all parties. At the same time, however, we need to look at what’s been done and balance that out with the reality of the magnitude of loss that we’re likely to suffer and, bottom line, what will it take for us to save our businesses.”

Specifically from airports, ARRA and AMAC are asking for:
– 12 months rent abatement.
– The suspension of all concessions-related capital projects as concessionaires seek to manage cash flow and retain employees to the extent possible.
– The retention of current leasehold interests without penalty or default for the duration of the 12-month period.
– Operational flexibility with respect to operating hours and closures to better align with passenger counts and passenger flows.

Additionally, from the federal government the trade groups are seeking $3 billion in relief in the form of low or zero-interest loans or loan guarantees, $2.5 billion in rent relief and $3 billion as a direct capital infusion. Airport concessionaires weren’t mentioned specifically in the federal government’s most recent aid package, but ARRA and AMAC will work for inclusion in any subsequent package.

Communication Seen As Key

As each airport begins assessing how best to utilize its share of the $10 billion allocation from the federal government, panel participants urged listeners to communicate with airports about their needs as soon as possible

“The most important thing we can do is to constantly communicate with our airports about our challenges and the dire need for their support and understanding,” said John Clark, chair of AMAC.

“We have to work with our airport partners to help them understand what is really impacting our ability to perform,” Clark told the concessionaires listening on the call. “Your business is wholly reliant on what happens at that airport,” he noted. The current situation, where concessionaires have lost roughly 90 percent of their business, is no fault of the airport but it’s also no fault of the operators. “We want to make sure our airports understand that,” Clark said.

He also urged concessionaires to reach out to one another for advice and best practices. “I would implore each of you to look at your companies, figure out how you can stay intact. But also know you have resources,” Clark said. “Yes, we compete in normal times, but these aren’t normal times. Don’t hesitate to reach out to fellow business operators and owners, ask them, ‘what are you doing?’ We want to all be able to come out of this.”

Rob Wigington, executive director of ARRA, also urged concessionaires to communicate their needs clearly and directly with airports. But he also stressed that ARRA will be spending the coming days connecting with the Department of Transportation and the Federal Aviation Administration to ensure that interpretation of Congress’ action allows for some of the grant money to eventually funnel to concessionaires.

“We’ll be working to ensure that, specific to the $10 billion that airports are going to get, the flexibility remains in the bill so airports can use it for any purpose at the airport,” Wigington said. “We will inevitably need to be dealing with FAA and DOT – who will administer those grants – to make sure they interpret it properly and give the airports the latitude they need and do not try to put in onerous restrictions that would tie the airports’ hands.”

“A big part [of the stimulus package] was to make sure airports could [avoid defaulting] on bonds, and that’s certainly critical, but we believe airports should have money available to provide the kind of relief we’re asking for,” Wigington added.

Other Avenues

While negotiations with airports might be the best opportunity for concessionaires to enhance their viability during the current crisis, AMAC chief operations officer Anthony Barnes also advised listeners on a variety of other resources small businesses can tap for assistance. They include disaster loans from the Small Business Administration, the Small Business Jobs Act, general small business relief from the overall $2 trillion stimulus package and various private sector initiatives to aid small businesses and workers.

AMAC and ARRA will also be looking to the expected next round of government bailout money. “As this bill has come out, we’re going to start working on the next bill, and at the same time we’re going to turn some communication to the broader aviation industry,” said Pat Murray, chairman of ARRA.

Murray also sees a point when the industry will be able to move from crisis management to laying the groundwork for growth.

“In the future we’ll start to assess: ‘What’s it going to be like on the way back up?’” Murray said. “We spent the last two weeks literally falling down the stairs as every day the news got worse and worse and worse. There’s going to be a rebuilding of this…and how we put all that back together is important.”