No Passengers, No Sales: COVID-19 Pushes DFW Airport’s Vibrant Restaurant, Retail Scene to the Brink

By staying open, Sadi Ertekin hopes he can sell enough men’s shirts, belts and ties to pay one of his five employees at DFW International Airport.

Ertekin, who runs menswear and womenswear boutiques at DFW, has already closed one shop and is thinking about whether traffic will ever recover to make it worthwhile to reopen.

Since the beginning of the COVID-19 pandemic, few people are flying and even fewer are interested in visiting shops and restaurants at airports. DFW Airport restaurant and retail sales brought in more than $400 million for business owners and the airport in 2019, but coronavirus has sent the business into a freefall.

Retail sales at the ariport dropped 87% in May and restaurants were down 79%. Stimulus loans helped, Ertekin said, but that money is running out. Things started looking up in June, but after a surge in COVID-19 cases in Texas during July, business has once again slowed, he said.

Now, owners of some of the airport’s 250 restaurant and retail operations are looking for a way out of long-term leases they signed under assumptions about a flying industry that may not look the same for years to come.

Next month, airport staff will present a plan to let retail and restaurant owners abandon leases with no penalty, said Ken Buchanan, DFW’s executive vice president for revenue management and customer experience. It would likely be approved by the airport’s board in August or September, he said.

The board already amended contracts in April to allow concessionaires to pay a percentage of sales for rent instead of hitting minimum rent payments. For businesses that have closed completely during the pandemic, they are paying nothing.

“We are not anticipating a large number, but there will be a handful that want to leave,” Buchanan said. “It’s still a tough environment.”

DFW has been the most generous among the nation’s airports at giving assistance to businesses, Buchanan said. DFW also gave discounts to airlines on gate and landing fees. Other airports followed suit by suspending minimum rent requirements, including Dallas Love Field.

It could be awhile before passenger traffic starts to recover. Expecting depressed flying in the fall, airlines such as American and Southwest have been urging employees to take buyouts. Analysts have said it will likely be late in 2021 before the airline industry is back on firm footing and possibly three to five years before a full recovery.

Compared to other airports, DFW has been a success story in terms of traffic, at least by COVID-19 standards. Passenger traffic is down more than 50% from last year, but DFW still managed to become the world’s busiest airport in May by shrinking the least. That was because American Airlines’ pandemic plan was to discontinue flights between smaller destinations and route more flights through major hubs such as DFW.

That’s bringing more than 100,000 passengers a day through DFW, Buchanan said. Compared to April, the airport as of late looks vibrant, bustling with passengers and gates crowded with commercial jetliners.

DFW won’t be hurting if retailers and restaurants decide to leave. The airport received $350 million in grants from the CARES Act to help it cover operating costs and debt during the pandemic. It already had a financial cushion large enough to cover 600 days of operating expenses, airport CEO Sean Donohue said.

Dallas Love Field, owned by the city of Dallas, received about $53 million in federal stimulus grants.

Airports in Chicago, Phoenix and elsewhere have given rent breaks to businesses and airlines, too.

DFW is giving businesses the option to leave because it’s more important to have a vibrant retail and restaurant industry at the airport than it is to squeeze money out of struggling businesses during an economic recession, Buchanan said.

If businesses do choose to leave, the airport will likely wall over vacant spaces and leave them empty until traffic and business picks up again.

Most retail shops have remained closed, including national retailers such as Mac cosmetics and many of the duty-free shops. Duty-free sales were down 97% in May, a tough period since there were only 22,622 international passengers, a 94% drop from May 2019. Most of those that have reopened are newsstands.

Not only are there fewer passengers, but they are acting differently too, according to airport business owners.

Michael Bugatti, co-owner of four airport restaurants, said most passengers now are “gatehuggers.”

“They go through security and then find a spot near their gate,” Bugatti said. “They don’t want to go in any stores and they don’t want to sit down and eat at a restaurant.”

Other passengers are eating at fast-food restaurants, instead of full-service eateries. But fast food sales were still down 64% in May compared to the same month a year ago.

Bugatti runs Hickory in Terminal B and Bar Louie, Shinsei and Whitetail in Terminal D. Because of the international flight presence in Terminal D, Bugatti has closed Shinsei and Whitetail temporarily and Bar Louise is only selling food.

He also runs Bugatti’s Ristorante near Dallas Love Field, which he said has also been decimated by the COVID-19 crisis.

“Even in February, people stopped eating at Shinsei,” Bugatti said of the Pan-Asian style restaurant. “The virus was coming from Asia and in people’s mind, anything Asian was a risk.”

Between the four restaurants, Bugatti has 133 employees at the airport. Most have been furloughed, but have been paid through a Paycheck Protection Program loan he was given. He received between $350,000 and $1 million from the small business relief program, according to Treasury Department records.

Even if they could fully reopen, restaurants are still limited to 50% seating capacity by a state order.

Social distancing and mask wearing at the airport are the norm now, Bugatti said. Very few people are sitting at the bar and socializing with other passengers.

Business travel also is way down, so very few people are ordering cocktails and wine, which are highly profitable for restaurants.

“We aren’t selling nearly as many $20 cocktails to business travelers,” he said.

However, travelers are ordering more food and eating bigger portions as a response to pandemic anxiety, Bugatti said.

“What do we do when we are stressed?,” he said. “Behavior No. 1 is to eat more.”

(c)2020 The Dallas Morning News

Visit The Dallas Morning News at www.dallasnews.com

Distributed by Tribune Content Agency, LLC.