Airport concessions in crisis as coronavirus takes toll on air travel
Tuesday, May 26, 2020
Victims of the coronavirus outbreak and its effect on air travel include the thousands of airport concessions across the country, and indeed the world, that have been forced to endure closure and laying off employees or, if still open, next to minimal sales.
Now, with airports and airlines receiving funds to help them through these difficult times, airport concessions are also calling on the government to recognize their plight and provide relief before many are forced out of business.
Business at airport concessions varies across the country, with some hub airports still operating a reasonable schedule of flights and others closed down completely, awaiting a return of passengers.
Regardless, even in the busier airports sales and revenues have dropped by 90% or more.
The Airport Restaurant and Retail Association (ARRA) said that in April only $38 million in sales was done across America’s airports, compared to $825 million a year earlier.
Airports so far have been allocated $10 billion in grant funding to support them through the crisis (with $50 billion allocated to airlines). However, none of the shops, restaurants, bars and parking operators are airports are eligible for a slice of this funding.
Many concessions across the country have received unofficial relief from airports and those managing retail space by offering rent reductions or deferments.
However, ARRA is asking for government support to keep businesses alive through these difficult times. It argues that funding is desperately needed to allow businesses to reopen, pay wages and rehire furloughed employees, as well as ensuring stricter safety and sterilization — and associated training — is adhered to.
The Association wants $5 billion in loans and grants to be made available to an industry that employed 125,000 people before the virus struck. Of these, only around 5% are thought to be currently employed.
With some of the highest rents among retail premises, airport concessions have also been limited compared to nonairport businesses in that they cannot adapt and offer takeaways, deliveries or online ordering.
ARRA Executive Director Rob Wigington said: “If operators are required to pay rent with no sales for any period, ALL operators will eventually fail. The only differentiating factor will be the exact moment when each company drains its cash resources.”
Thankfully the message seems to be getting through, with the Chicago Department of Aviation announcing a program of financial aid to concessionaires at O’Hare and Midway airports.
Chicago Mayor Lori E. Lightfoot said, “The slowdown in travel has had a profound impact on these businesses, and we are determined to provide the kind of assistance that ultimately may make the difference between staying in business or closing for good.”
In recent years airport concessions have seen a shift away from the dominance of national chains towards local brands and businesses. Mayor Lightfoot said: “Many airport concessionaires are small, local, and diverse businesses. They are the lifeblood of our airports, providing local flavor and culture to the traveler experience.”
The problem is not unique to the United States, with airports across the world being called to help concessions and private airport service providers. As airlines look to increase flights from June, it could mean retail within airport terminals begins the slow return to healthier sales, but some will unfortunately succumb or never reopen without further support.
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