Dec. 18--The long and ferocious competition over the lucrative baggage-wrap concession at Miami International Airport is reaching new heights.
On one side is Sinapsis Trading USA, which holds the exclusive multi-million-dollar contract to machine wrap baggage in plastic for passengers at MIA.
On the other side is Secure Wrap of Miami, the former incumbent firm that was ousted from its catbird seat by Sinapsis a year ago.
On both sides: high-powered lobbyists and attorneys fueling the feud with combative tactics.
"There are a lot of lobbyists working on this, a lot of information being put out,'' said Miami-Dade Mayor Carlos Gimenez, who is proposing to cut a controversial new deal for newcomer Sinapsis. "This was a hot topic when the contract was approved, and it will continue to be a hot item.''
"It's always been very controversial and very high-profile,'' said Miami attorney Pablo Acosta, a Sinapsis lobbyist. "I don't know if it's because of all the money involved.''
Adding to the drama: a face-off between Gimenez and County Commission Chairman Joe Martinez -- who plans a run for mayor next year -- leaving uncertainty about when the commission will take up the politically charged issue.
The luggage-wrap business, on its face, is simple: At MIA's passenger check-in areas, the bags are machine wrapped in stretchy plastic that protects against pilfering and damage and deters anyone from inserting anything.
Now, a year after taking over the MIA concession , Sinapsis is seeking a break on how much it must pay the airport, claiming that Secure Wrap is siphoning off its business by wrapping bags before they are brought to the airport.
Sinapsis, a Coral Gables-based arm of Italian giant TrueStar Group SpA, won the coveted contract in July 2010 by guaranteeing to pay a minimum of $11.1 million a year to the county-owned airport. That ambitious bid trumped Secure Wrap's competing offer of $4.1 million a year -- almost four times what it had historically paid.
Sinapsis also offered to share 56.5 percent of profits, compared to Secure Wrap's offer of 35 percent.
It was a brutal blow for Secure Wrap, which had held exclusive rights at MIA for nine years, reporting 2010 annual revenue of about $10 million, and had operated there non-exclusively before that.
Sinapsis says it expects to gross more than $15 million in revenues this year.
For years, Secure Wrap, run by Enrique "Henry'' Ramos, and its phalanx of lobbyists fended off efforts to get the county to put the baggage-wrap contract out for bid. At one point, Secure Wrap argued it was the only firm that had the necessary security clearance from the U.S. Transportation Security Administration to re-wrap bags on the post-security side of the airport.
A major political push by Sinapsis -- and a report by Miami-Dade Inspector General Christopher Mazzella in September 2008 urging the county to give other firms a shot at the coveted business -- cajoled the county to put the concession up for bid.
Beat out by Sinapsis in July 2010, Secure Wrap vacated the airport in December 2010 but remained undeterred by the displacement. By February 2011, Secure Wrap opened shop at an off-airport location. It now has four sites, charging $7 to $9 per bag, compared to Sinapsis' $15 fee.
"When they lost the contract at the airport, they entered into relationships with travel agencies'' to provide the same services off-airport, said attorney Joseph DeMaria, who represents Secure Wrap.
Secure Wrap draws heavily from Cuba charter flights, whose passengers widely use baggage-wrap services. But unlike Sinapsis, Secure Wrap doesn't have machines inside the secure area of the airport to rewrap them if TSA opens them for inspection.
Within months of starting at MIA, its first foothold in the United States, Sinapsis began complaining to airport officials that market conditions had soured since the company had agreed to pay at least $11.1 million a year to the airport.
Not only was the Italian firm losing business to the aggressive off-airport foray by Secure Wrap, but in March 2011, American Airlines, the dominant carrier at the airport, began charging to check a second bag on flights to Central America and the Caribbean -- luggage that previously had been checked in for free. By August, American expanded that policy to more international flights.
Airport officials had consultants examine the new market dynamics. Their conclusion: American's policy change on baggage fees wasn't hurting Sinapsis much, but the offsite wrapping of Cuba charter flights had swelled significantly.
Early this month, Mayor Gimenez sent a memo to the Miami-Dade Commission recommending an amendment to Sinapsis' contract, to reduce its minimum payment to $8.7 million a year from $11.1 million. Under the proposed change, Sinapsis also would be able to wrap bags at off-airport sites, sharing 30 percent of the off-airport revenue with the airport.
But there would be a downside for Sinapsis: The county would put out a new bid for the baggage wrap concession, cutting Sinapsis' five-year contract to one more year or until a new contract is awarded.
"The market conditions have changed,'' Gimenez said in an interview. "Their competitors have started to wrap bags outside the airport and are dipping into revenue. We thought it was fair to reduce'' the minimum annual guarantee.
He added: "I think our course of action is most prudent, to have a new competitive bid for a new contract based on the new market conditions.''
Airport Director Jose Abreu said the administration believes the proposal would make the best out of a bad situation.
"Nobody's happy about this,'' he said. "But I'd rather have the $8.7 million than zero. . . . If we throw them out, we'll get zero.''
Miguel Southwell, deputy director of the airport, said of the proposed amended contract for Sinapsis: "Even at $8.658 million, it's still more than twice as much as the Secure Wrap bid'' of $4.1 million.
During Secure Wrap's tenure, the firm typically paid the airport about $1.1 million a year, he said. "During one year, we insisted on a minimum of $2.1 million.''But Secure Wrap officials are fuming at the idea the competition might get a break, if the commission buys Gimenez's proposal.
Ramos, chairman of Global Baggage Protection Systems, which does business as Secure Wrap, argues the county should terminate Sinapsis' contract if the newcomer can't live up to the rosy promises it made to get the contract.
"As the bidder who came in second place, I want to get an opportunity to get back in there,'' said Ramos, who predicts that the county's bidding process would drag on "three or four years.''
Reflecting their growing animosity, in November Sinapsis filed suit in Miami federal court against Secure Wrap and several other parties, alleging the competitor engaged in civil racketeering with "Mafia-style tactics'' aimed at defaming Sinapsis. Among other things, Sinapsis alleges Secure Wrap spread false information about the company, with the help of Miami-based blogger Nelson Horta, who publishes on a site named Nelson Horta Reporta.
DeMaria said the suit is "ridiculous, and we intend to aggressively defend against it.''
Horta's attorney, Jose Herrera, said the blogger did nothing wrong. "This is all political gamesmanship to try to intimidate the other company,'' he said.
As for the lawsuit language, "It's almost as if a novelist wrote it,'' he said. "I mean, [references to] The Godfather? Please, give me a break.''
Another problem facing Sinapsis: It hasn't been able to obtain a new performance bond, which ensures the county will get paid on the contract, according to the mayor's memo to the commission. Sinapsis said it will be able to get a new performance bond once the county reduces its obligation.
But it's unclear when the county commission will take up Gimenez's proposal to amend the contract.
The mayor's office sent materials to Chairman Martinez's office in a bid to get the administration's proposed amendment placed on a commission committee agenda last Monday.
But Martinez declined to place the item on the agenda and pressed the mayor to provide more details on why the contract should be reduced. The mayor sent back additional information a few days later.
In the memo to the mayor, Martinez wrote: "Consideration of any reduction of a revenue-generating contract requires a thoughtful and deliberate review.''
Copyright 2011 - The Miami Herald
