Fierce competition for a captive audience — millions of U.S. air travelers — has turned the arcane world of airport concessions contracts into a minefield of politics and potential litigation.
And it’s not just in Atlanta, where the City Council last week spent nine hours discussing the list of winners in a massive revamp of restaurants and shops at Hartsfield-Jackson International Airport. Even before the council voted to approve the deals, three losing companies had filed administrative protests.
In the last year or so, there have been a string of lawsuits and protests over concessions contract awards at airports around the country. Airport concessions are becoming more contentious because competition has intensified and the stakes have been raised.
More companies from around the world are seeking sales spaces at the biggest airports, and restaurateurs also increasingly see more opportunity in airports for a steady stream of customers and cash.
Lawsuits or protests over concessions contracts have made news in Chicago, Phoenix and Orlando. In Los Angeles, a protest unsuccessfully sought to block the award of a concessions contract, while in New Orleans, a concessionaire recently settled a lawsuit allowing it to sever a relationship with one of its partners.
“The reason why there’s lawsuits is [that] it can be a highly lucrative opportunity,” said airport consultant Susan Warner-Dooley. She said airports can reduce their risk by using “a good transparent defined selection process — which is still no guarantee that there won’t be lawsuits.”
And city officials have acknowledged the risks of being sued — taking measures specifically to protect themselves in the event of legal challenges and decrease the chances of having to pay settlements.
Atlanta Mayor Kasim Reed cautioned council members considering the contracts at their meeting Tuesday that if they broke the recommended bundles of contracts up and voted for some but not for others, “I think you put the city in a position where we would almost definitely have to write a check.”
“We know this is going to be challenged,” he added.
The council approved the concessions deals with 12-3 votes on each of two major bundles of contracts.
The efforts to guard against legal action included keeping details about proposals from becoming public due to attorney-client privilege. City Council member Felicia Moore objected, saying, “This kind of non-information vetting is what contributes to suspicion. ... I’m going to vehemently object to the fact that the public can’t know who’s in these packages.”
In some ways, the public process that’s at the heart of running government is at odds with the government’s interest in minimizing its legal risk by keeping information private under attorney-client privilege.
“It’s a balance, particularly for this administration,” said Sonji Jacobs, a spokeswoman for Reed. “It’s not always an easy thing to do.”
The stakes are particularly high for the Atlanta concessions contracts, which cover 150 spaces in the existing airport and a new international terminal opening this spring. Failing to win a long-term contract in one of the largest round of concessions contracts in the nation could mean being shut out of Hartsfield-Jackson for 10 years.
The spaces are expected to generate more than $3 billion in revenue over that period, with a cut going to the airport.
Meanwhile, the opportunity at the airport is particularly tempting for the restaurant industry.
“I think [competition] is a little bit more aggressive today than it has been in the past,” said Portland, Ore.-based consultant Pat Gleason.
He said restaurant companies are looking for more non-traditional locations such as universities, hospitals and airports.
“These contracts only come up so often,” said Matt King, president of Delaware North Companies Travel Hospitality Services, which won a large contract for restaurants at Hartsfield-Jackson.
To some concessionaires, that’s worth fighting for. The three protests filed so far in the Atlanta concessions selection were all denied, but the companies can appeal to a hearing officer or sue if they choose.
“You’re not going to make everybody happy,” said Regynald Washington, chief operating officer at Hojeij Branded Foods, which won a large contract for restaurants at Hartsfield-Jackson. “This is the busiest airport in the world. That’s why it’s so highly sought after.”
At U.S. airports, an influx of European concessions firms has also increased the competition, Washington said.
“Years ago, you didn’t have as many players in the field,” Washington said. “Today, you have a lot more people trying to get a piece of the pie.”
Two other Hartsfield-Jackson concessions contracts have generated legal action or raised the possibility of challenges of their own in the last several weeks — a currency exchange contract and a duty-free contract.
In the case of the currency exchange contract, a Fulton County Superior Court judge last week granted a temporary restraining order preventing the mayor from awarding the contract for up to 30 days, in order to enable Travelex, which did not win the contract, to review procurement documents.
In the case of the duty-free contract, an attorney for a company that failed to win the contract has raised concerns about the decision to the Atlanta City Council and raised the possibility that he could seek to block the deal.
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