Expansion of Atlanta Airport Concessions in Jeopardy

An Atlanta city councilman has threatened to hold up the planned expansion of three food-and-beverage concessions at Hartsfield-Jackson International Airport unless airport officials can better explain how the lucrative deals are being awarded.

Councilman Lamar Willis grilled airport General Manager Ben DeCosta earlier this week after DeCosta proposed the expansions to the City Council's Transportation Committee during a contentious session.

DeCosta said the expansions, which would be awarded to existing vendors without bids, will benefit passengers with better service and provide additional money to the city through increased rents to the vendors.

"These are good deals for the city financially," DeCosta told the committee. "These are good deals for passengers."

However, Willis and Councilwoman Felicia Moore questioned the preferences being given to the three vendors and asked DeCosta to provide additional information to justify the expansions.

"If he can't make it clear to me what's going on and make it clear with written documentation, I will move to hold up on this at Monday's council meeting," Willis said Thursday. "It's only an agreement if we allow it. It's our decision to open up this new space."

Concessions at Hartsfield-Jackson have been controversial in the past, with charges of cronyism and sweetheart deals. Sales by retailers and concessionaires at the world's busiest airport generate about $600 million a year from the 85 million passengers who pass through the facility annually.

The Transportation Committee on Wednesday tentatively approved two of DeCosta's proposals --- an 1,881-square-foot expansion by Jackmont Hospitality and Global Concessions Inc. and a 952-square-foot expansion by Host NCM on Concourse E. However, the committee delayed action on a third proposal --- a 902-square-foot expansion by Paschal's Concessions on concourses B and C --- after Willis and Moore raised increasingly pointed questions about the proposals. The expansions must be approved by the full council Monday before they can proceed.

Transportation Committee members asked for specific maps of vendor locations and the proposed uses of the expanded space.

DeCosta said all of the expansions are for existing vendors who have the "right of first refusal" written into their contracts. That, he said, means that if additional space becomes available near their businesses, they get first shot at the new space without going through a competitive bidding process.

"There's a tremendous investment these companies make," DeCosta said in a telephone interview Thursday. "This is one of the things they negotiate in [their contracts] so they don't have the city bid out something that competes with them."

Daniel Halpern, one of the owners of Jackmont Hospitality, said he was unsure about the specifics of his contract relating to obtaining additional space through expansion. His company operates TGI Friday's at the airport.

"I have no idea if I have a right of first refusal or not," Halpern said.

Calls to the other two vendors in the proposed expansions were not returned.

The airport manager said studies show the airport vastly underserves passengers with food and beverage outlets. He said the airport is now making aggressive efforts to recoup little-used space and convert it into food and beverage concessions.

Willis, however, said he has been shown nothing that indicates there is an unmet demand, and he questioned permitting lucrative retail expansions without competitive bids.

Moore said Thursday that the initial 10-year vendor contracts, first awarded in 1996 and later given five-year extensions, might have been "poorly negotiated."

"I think we need to look very closely at how these are worded in the future," she said. "The policy should perhaps be changed. We need to have a fuller discussion."

Willis said it is his understanding that the vendors will be permitted to lease the additional space at prices negotiated in their original contracts, which he said would short-change the city.

"They should not be allowed to get 2006 space at 1990s prices," he said.

He also questioned the practice of permitting existing vendors to expand without having to compete in a bid process.

"If that's the agreement they have, then that's the agreement, and we'll probably end up living up to it," Willis said. "But to the extent it's not a competitive process, it's not fair."

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