Hartsfield-Jackson plans to extend rent relief for concessionaires

Hartsfield-Jackson on Tuesday, June 23, 2020.

Credit: Miguel Martinez for The Atlanta Journal-Constitution

Credit: Miguel Martinez for The Atlanta Journal-Constitution

Hartsfield-Jackson on Tuesday, June 23, 2020.

Hartsfield-Jackson International wants to extend for a year the rent relief offered to airport restaurant and shop operators, as drastically reduced travel is expected to continue during the coronavirus pandemic.

The airport is seeking Atlanta City Council approval to continue to waive the minimum rent requirements, and instead collect just a percentage of the businesses’ revenue, until June 30, 2021. It also plans to waive fees charged to concessionaires for parking, marketing and storage.

Passenger counts are down 80% compared with a year ago, according to airport general manager John Selden. “We have a very slow recovery going on.”

Months ago, concessionaires laid off hundreds of workers as their establishments shut down and travel plummeted. Multiple concourses closed at what was once the world’s busiest airport.

The Atlanta City Council in late March approved a measure to suspend minimum rent requirements for airport shops and restaurants through June 30, 2020, allowing those businesses to instead pay a percentage of revenue.

“We didn’t, at that time, know how long the pandemic was going to last,” said Andre Dickens, chair of the Atlanta city council transportation committee, which voted in favor of the rent relief Wednesday. “The challenges still persist so this is a way to now do it for another year.”

The rent reduction is expected to contribute to a more than 57% drop in the airport's revenue from concessionaires, to a forecast $50.9 million in the next fiscal year starting July 2020, down from more than $120 million normally.

After the one-year of rent relief, the airport also plans to adjust future minimum rent requirements by basing it on percentage rent paid in the previous 12 months.

“This is a balancing act,” said council member J.P. Matzigkeit. “We need to consider certainly the concessionaires, but also the airport in this equation as well.”

Hartsfield-Jackson qualified for $338.5 million in federal stimulus funding from the CARES Act — the most of any airport in the country — which will help the airport to shore up its financial position, according to airport chief financial officer Greg Richardson.

He said suspending the minimum rent “hopefully ensures that the concessionaires will come back [and reopen] sooner rather than later.”

City council member Marci Collier Overstreet pointed to forecasts that a full airline recovery could take three years.

“No one sees this bounce back happening quickly,” Overstreet said. Because of the airport’s role in the regional economy, “the state of Georgia really depends on us getting this right.”

The city’s law department is also working on a separate measure to extend airport rent relief for rental car agencies, some of which have filed for Chapter 11 bankruptcy.

Hartsfield-Jackson is also looking at extending airport concessions contracts for another three years.

Selden said the existing contracts should be extended because of “an inability to get new concessionaires out on the terminal,” since financial conditions keep them from being able to get financing for new locations.

“We need to ensure that we keep the concessionaires that we have during this time,” Selden said. The plan would be to put new concessions locations up for bid in two years, which may allow enough time to go through the contracting process and strike deals for new restaurants and shops before the three-year extension ends.

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