Minority Business at BWI Assessed; Tenant Complaints Prompt MD Audit of Concessions Firm
DBEs say BAA Maryland became too focused on building a shopping mall at BWI, hurting DBEs earning ability
Celebrate Maryland was the most recent business to go. This month, Fulton, 60, sold off her inventory of regionally themed key chains, mugs and Maryland wine and food, and said goodbye to 40 workers at her four stores.
It marred a retail career that she began in 1969 at the Columbia-based Rouse Co., which opened Harborplace and many area malls. Fulton launched her business in her hometown of Ellicott City 20 years ago and moved it to BWI in 1995.
When BAA was hired, she welcomed the company, seeing a chance for the tired concessions to get a fresh infusion of money. Fulton agreed to spend $1.2 million to build new airport stores.
But airport construction forced her to relocate a store several times. BAA and airport officials never turned over space for four of the eight stores she expected to open. Fulton was in debt, her rent was up and sales were down, from $3.3 million in 2003 before BAA took over to $2.7 million last year. She stopped paying rent in December.
A big problem, Fulton said, was competition from Hudson News, a private, New Jersey-based giant in the transit world with shops in about 70 airports and train stations. It's BWI's largest retailer, and, with a partner, had already opened nine of 18 planned stores. Those shops sold many of the same Maryland-themed goods as Fulton in addition to soft drinks, snacks and magazines. Airport documents from 2004 show that only four other such stores were planned.
Fulton filed her lawsuit in Anne Arundel County Circuit Court in March, accusing BAA and the airport of unfair competition and breach of contract. BAA asked her to leave within a week. Also, it has temporarily replaced one of her stores with a gift shop operated by Hudson News.
Mark Knight, head of BAA Maryland, declined to comment specifically because of the lawsuit. But he said he was disappointed by Fulton's course of action, which was in "stark contrast to the outstanding partnerships BAA Maryland has forged with over 40 other tenants."
Today, 10 of those are women- and minority-owned firms in the state's Minority Business Enterprise program, including a new one this year. That's up from four in the year before BAA launched the minority program.
But declining revenue at shops such as Celebrate Maryland means that BAA hasn't met all the goals set by the airport. In the latest report from fiscal 2006, 11 percent of the retail revenue came from certified minority owners, falling short of the airport's 30 percent goal. One of the owners has since gone out of business.
For food sales, about 46 percent came from minority-owned shops last year, far outpacing the airport's goal of 15 percent. Three of the owners are no longer in the program.
Overall, BWI concession revenue was $57 million in the fiscal year that ended October 2006, and about 37 percent came from minority businesses.
BAA was picked in 2004 in the midst of a billion-dollar airport expansion. Some elected officials and HMSHost complained that the process was narrowly crafted to suit BAA Maryland, an arm of the European-based BAA PLC. The company controls all concessions in one other U.S. airport, in Pittsburgh.
BAA promised Maryland taxpayers $110 million over 10 years. The lease was extended five years to compensate BAA for its $19 million investment at BWI. Because the past three years were considered a transition, the lease will expire in 2022. Construction delays and unexpected costs, however, mean that the "Airmall" is only 60 percent complete.
Porcari said he did not know if there were widespread problems with the treatment and operations of BWI's minority-owned businesses, pointing out that a third of small companies nationwide fail in the first two years. Even so, Porcari said, he has enough questions about airport merchants to order the audits.
Part of doing business
BAA's Knight insists that the program is working, and that overall revenue from minority members has grown since his company took over operations. He said the audits are part of doing business with the government.
"Our success rate speaks for itself," said Knight, saying that only two businesses have gone under at the airport and the rest left for other reasons. "Is there going to be a problem here and there? Yes, of course."
