Get Ready to Pay Up to 3% More on Some Airport Purchases at PHL Because of this New Fee

July 3, 2024

Jul. 2—Travelers shopping and dining at Philadelphia International Airport can expect to see a new fee of up to 3% on some of their purchases.

The fee was approved in March by the city's Department of Aviation and is intended to mitigate the increased cost of operating at the airport as the full rates of a recent wage and benefit ordinance went into effect in January. To date, about 87% of businesses at the airport have implemented the fee.

"Our operators expressed concerns that due to the changes to hourly wages, hourly benefits, sick time, federal holidays and vacation time, the cost of operating at the airport changed quickly," Kate Sullivan, the department of aviation's chief commercial officer, said via email.

Some of the operators "were concerned about whether they could keep their locations under a changed cost structure," she said.

Operating a business within an airport is more expensive, concessionaires have said, because of factors including rent and labor, the Wall Street Journal reported last year. Almost 80% of major airports have prices that are higher than they would typically be at the street level outside the airport, the Journal reported.

At PHL, operators are able to raise prices to a certain point. Businesses can charge up to 15% more than what prices would typically be outside of the airport. Chickie's & Pete's crabfries, for example, cost $8.79 at the airport compared to $7.99 at the bar's South Philly location on Packer Avenue, according to menus listed on the company's website.

This new 3% fee is in addition to the increased pricing model that businesses within the airport can adopt.

"We looked at a number of airports and modeled the fee off of how similar airports have addressed changes that impact the cost of operating at the airport," Sullivan said.

Why is the new fee being implemented?

In 2021, City Council voted to increase wages and benefits of several thousand airport workers, which was then signed into law by Mayor Jim Kenney. American Airlines, a major employer at the airport, had pushed back on the increased costs the bill would entail as airlines were still recovering from the pandemic. Some airport businesses were also frustrated with the increased costs, The Inquirer reported in 2021. Ultimately, implementation was delayed.

The full rates of the wage and benefit ordinance went into effect at the airport this January, according to Sullivan. Covered employees make $17.20 an hour and have a supplemental health benefit of $4.57 an hour.

The Department of Aviation and Marketplace PHL LLC, the airport's food and retail partner, which handles operator leasing, development, and management, have been monitoring the ordinance's impact. In response to operator concerns, businesses were allowed to increase their prices in January, charging up to 15% more than a similar business would charge outside of the airport, according to Sullivan. Businesses had been able to charge up to 10% more in prior years. That compares to 18% more in Los Angeles, 15% more in Kansas City, and 10% more in New York City, according to reporting from the Journal in 2023.

" The Department of Aviation continued to hear concerns from operators and the Employee Wage and Benefits Fee is in response to those concerns," Sullivan said.

Who is charging the fee, and where does it go?

Airport operators can choose whether they want to adopt the fee, and some might not be able to because of franchise or other business agreements, according Marketplace PHL's website. To date, 128 of a total 153 open locations within the airport are charging the fee, according to Sullivan.

Businesses that charge the fee need to make it known to customers, including by posting signage about it and reflecting it on the receipt.

The airport does not take any portion of the fee; it goes entirely to the business operator. The fee is also not a tip that gets disbursed directly to employees.

The maximum fee a business can charge is set by Marketplace PHL in conjunction with the Department of Aviation, and every six months the fee will be reviewed to measure its impact.


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