The founder of Airport Plazas, George Abi Zeid, relates that his concept of constructing ‘plazas’ at airports to service the needs of airport employees and customers — and generating a new source of revenue — wasn’t immediately embraced by the industry.
Recalls ABi Zeid, “Initially it was really an uphill battle. They were skeptical. JFK was the first airport in which we were allowed to sit in on an RFP [request for proposals]. They were proposing to build just a gas station and a 1,100-square foot store. But with the high rent that they were proposing just for the ground lease, I saw no way to make a business out of it. So I proposed that they add other services — a car wash that could be used for taxis and limos and even visitors waiting for flights; or a quick oil change.
“During the meeting at Kennedy, one representative from Newark liked what I proposed and told me about an RFP coming out at Newark. Sure enough, we submitted for it and ended up winning the project. Now that it’s built, airports around the country have gotten an interest.
“Generally the plazas are built on land that doesn’t generate revenue. Plus, it provides a tremendous convenience for employees and for taxis and limos.
“In addition, airports have a love/hate relationship with cell phone lots. It eats away at their short-term parking, but they have to offer it. What we are proposing to airports around the country is, why not give us the land for free, put the cell lot next to our facility, we’ll pave and maintain it and service it, and visitors park for free, and sit in our food court. It’s something that generates income.”
Prior to founding Airport Plazas, Abi Zeid had some 20 years of success developing and operating service plazas in the New York metro area through his Long Island-based GAZ Realty.
The first plaza at Newark Liberty International Airport opened in September 2010 and the company subsequently won RFPs at JFK, Fort Meyers, Tulsa, and airports.
“I’ve been an operator, designer, financer of plazas around Long Island,” explains Abi Zeid. “I decided to take this concept into a niche market at airports because airports post-9/11 are a different animal. Also, gas stations around airports have a bad reputation — they tend to be dirty, unkept. We wanted to bring the airport gas station into the highway station platform.
“Car rental returns at Newark are our best customers. Now they know they have an oasis in the middle of the airport.”
The Newark Experience
Despite the initial hesitancy by airports to embrace his concept, Abi Zeid says the success demonstrated at Newark International has served as a catalyst, at a time when airport operators are seeking new sources of revenue and new ways to serve customers and employees.
Says Abi Zeid, “It’s been a phenomenon. We sell based on the street prices of surrounding stations around the region. We want to be known as the gas station that sells at street prices. Revenue for gas continues to grow on a daily basis.
“Where we’re running a bit slow is at the car wash, though tons of taxis and limos are using it. We’ve not been able yet to attract the employees to the extent we had expected. I think a reason is that the employee parking lot is based far away and employees get shuttled there.
“With airports we depend a lot on fleet accounts for our compressed natural gas business, for diesel and gas, and even for car washes. We have just contracted with a limo service that has some 75 cars to do all the fueling at our facility.
“We learned a lot from Newark to pre-sell fleet sales up to 90-120 days before opening.”
Besides the contracts already underway, Airport Plazas is currently in discussions with some 20-plus airports, from West Palm Beach to Indianapolis to Medford, OR.
The company also likes to promote its “green” impact, centered on the promotion of alternative energy fuels. The company offers E85 or CNG [compressed natural gas] and is considering offering electric charging stations in the future. The company also tries to include design elements such as LED lighting and solar panel canopies, and the use of environmentally friendly products such as hot air hand drying machines instead of paper towels.
Completing the airport deal
When considering a new airport location, Airport Plazas’ first consideration is size of the facility — with a focus on passenger counts — and then location, preferably with adjoining highway access.
Regarding size, Abi Zeid comments, “It’s a big limitation. We look at a minimum of three million passengers to have a plaza, unless the airport gives us a corner location where there’s easy access off the highway, like Tulsa. The number of passengers dictates the number of employees, limos/taxis, etc.”
As with any airport tenant lease, length of the term is important. Abi Zeid says that his company’s investment can run from $5-12 million, the latter being the amount to construct the plaza at JFK International. A standard lease that’s beginning to evolve, he says, is 20 years with two five-year options.
Regarding revenue, airports generally receive 5 percent of gross over an initial $500,000 in annual sales. At Newark, the airport authority receives three cents per gallon over 4.5 million gallons sold — nothing before the 4.5 million threshold. “The 5 percent is almost universal around the country,” says Abi Zeid. “The three cents at some airports is 1.5 cents. Newark is very busy gas-wise for us. Some airports exempt the first half million gallons a year.”
Is there a potential deal killer when negotiating with airports? Answers Abi Zeid, “Certain airports have a clause in their leases where they can buy you out with a six-month notice — this is a deal killer for us. Even though airports assure us it’s never happened in the past, if they need the property for aviation needs they’ll want the ability to do that.”
And, just as retail companies have discovered that operating in the airport environment is a different animal, so too has Abi Zeid had a similar experience.
He comments, “The bigger the airport the more complex it is, of course. Dealing with the Port Authority [of New York & New Jersey] is rewarding at the end but it is painful — but in the end you’ll have a deal you can count on. The details they look for in our plans causes you to spend on engineering plans.
“I have projects in suburban Long Island that we’ve been working on for four or fives years and I still don’t have the approval from the local towns or municipalities. So, the airport might be a painful process but I know after two years I’ll have the permit and I’m going to build.”
While Airport Plazas offers major brands for fuel and other commodities it sells, Abi Zeid says that the company first researches the local market to uncover which brands may sell best.
“The beauty about our offering is that we’re not married to one brand of fuel, or food, etc.,” he says. “We have a global agreement with Seven Eleven that they have the right of first refusal for the site. What we do before we decide the brand name of the gas and store is we hire a market and traffic study company in Dallas. It does a market study for us on the leading brands in the market for gas and food.
“The brand name is really dictated by the local market and airport.”
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