D/FW Concessionaires May Get More Help

D/FW officials are quietly asking American -- the dominant market-share leader -- to spread its flights more evenly across gates.


D/FW AIRPORT -- Despite dramatic cutbacks by Delta Air Lines and reductions in American Airlines' schedule, concessionaires contributed a record $35.6 million to the airport in fiscal 2005.

But life doesn't appear as rosy this year. Concession revenue is down 13 percent in the first two months of fiscal 2006. The airport board, which last year granted some relief to the concessionaires, will consider more today. And D/FW officials are quietly asking American -- the dominant market-share leader -- to spread its flights more evenly across gates.

"I personally have a concern for what some of the concessionaires are going through," Ken Buchanan, D/FW executive vice president for revenue management, told the board this week. "It's a huge issue. Some of the concessionaires that I've met with are in very difficult situations. We want to work with them on that."

Board members, who have been working on proposals to help the airport's 237 shops, restaurants, bars and other concessionaires, are scheduled today to discuss help that could include:

Extending concession leases so operators can spread losses over more years;

Changing airport rules to allow concessionaires to use their leases as collateral for bank loans;

Increasing advertisements throughout the airport to encourage passengers to venture farther than the six gates that Buchanan says they normally walk to for shopping.

Wednesday, airport officials met with American executives to talk about the possibility of spreading flights.

But Kevin Cox, the airport's chief operating officer, said that won't be easily done because American saves money by having flights grouped into smaller areas.

"I don't want to leave anyone with the impression that we can flip on a switch tomorrow and American's going to spread out their flights," Cox told the board Tuesday. "It doesn't work that way."

But Cox also said the airport believes that it has "some good business reasons why they should consider redistribution across the terminals."

Officials on both sides declined to talk about how the meeting went. The issue also is expected to be discussed at today's airport board meeting.

The concessionaires' problems are no small issue for the airport. Concession revenue is the third-largest income source for the world's third-busiest airport.

The problems stem from a reduced American flight schedule, a delay in American's opening at the new international Terminal D and Delta Air Lines' pullback from its hub last January. But Gilbert Aranza, the airport's largest minority concessionaire -- with about $15 million invested in shops throughout the five terminals -- goes even further: He says he thinks Terminal D's retail space is overbuilt.

"The last thing I want to do is see a concessionaire close," Buchanan told the board this week. "Not just from a concession standpoint but also because of the overall impact it has on us as an airport."

American is D/FW's largest tenant, accounting for 85 percent of passengers in October, the most recent statistics available.

And when American reduces its flights -- as it did last fall when it trimmed 13 departures because of high fuel costs -- it affects all concessionaires, said Sadi Ertekin, co-owner of MallaSadi Men's Boutique on the south side of Terminal D.

"It's literally a chain reaction, that one person started it and everybody else is feeling the effect," said Ertekin, whose airport business is struggling.

Ertekin said he understands why the airlines cut their flights and why the airport is limited on what it can do to help. But he said he thinks that the airport could have held off opening Terminal D until the airline industry further rebounded.

"I don't see any kind of a quick fix to this issue," he said.

For the first two months of the airport's 2006 fiscal year, concession revenue is down $900,000, about 13 percent, from the $7.1 million the airport budgeted to receive through Nov. 30.

Almost all of that is because of the airport's elimination of a minimum annual guarantee it normally charges concessionaires.

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