First championed by Martin Moodieone of the stalwarts of the concession industrythis model has airports, retailers, and suppliers cooperate in developing concession operations. As a result, airports may wish to consider going a step further. Without this expertise, the concession will almost certainly fail to operate at an optimum level. The Audit Committee has reviewed this report and is releasing it in accordance with Article 2, Chapter 6 of the City Charter. While the airport might invest capital in the joint venture, it must be involved in a management committee overseeing the business. The city named the Vantage Airport Group to run the concessions when the new terminal opens in 2023. Alan has over two decades of experience in commercial/concession management, facility planning, financial analysis, and government procurement. With the new economic and industry realities, capital access may be an even greater hurdle. Denver International Airport will price $925 million of refunding bonds to help ease its debt service burden during the pandemic-driven traffic decline . The compliance and accounting questions related to the COVID-19 outbreak and the related new funding streams are significant. While the model has primarily been used for duty free concessions, it has worked equally well for other types of concessions. However, MAGs in concession contracts still expect continued growth. Like their partners in the airline industry, airports have been dramatically affected by the slowdown in flights and passenger traffic associated with COVID-19. . This simplified agreement includes the requirements under the CARES Act and makes funds immediately available for expenses, other than airport development, including payroll, debt service, utility expenses, service contracts, and supplies. Add it up, and the cost of operating at an airport is often higher than operating at a typical mall. If youre far enough along in the implementation process, you may want to move forward with adopting these standards. In North America, airports tend to look at MAGs as the least amount of acceptable rent. percentage of their annual gross revenues derived from operations at the airport or a minimum annual guaranteed amount, whichever is greater. For more insights from Alan Gluck and ICF, please go to https://www.icf.com/insights/transportation, The future of airport concessions in a post-COVID-19 world, https://www.icf.com/insights/transportation. The actual process is the easiest for the airport sponsor since there are minimal contracts. Concessionaires need to understand this new business reality when they ask for relief. Airports outside of North America are already experiencing the benefit of joint ventures between the airport operator and concession operators.
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