Airports in Miami and Orlando, Florida and Los Angeles, California have granted some level of financial assistance to their concessionaires, business partners and airlines in response to the unexpected and steep declines in passenger traffic due to the global coronavirus (COVID-19) outbreak.
In Miami, the Miami-Dade Board of County Commissioners approved a $64.8 million relief plan on April 7 for the County’s business partners at MIA.
Passenger traffic has fallen by 90% and most of MIA’s concession locations have been closed since March, said County Mayor Carlos A. Gimenez in a statement released by MIA.
The relief plan will provide financial assistance to airlines, concessionaires, car rental companies, cargo handlers, fixed base operators, general aeronautical service permittees, and any other tenant in the County’s airport system currently in financial distress.
The plan will also require those receiving any assistance to provide similar relief to their subtenants and/or subcontractors.
MIA’s relief plan is initially for three months retroactive from March 1, 2020 through May 31, 2020. It provides three forms of relief: deferral of monthly rent payments and other related charges for passenger and cargo airlines and ancillary businesses, with interest charged on deferrals extending beyond MIA’s annual reporting period; waiver of minimum annual guarantee (MAG) monthly payments, monthly rent and other related fees for operators contracted to pay rent, MAG and a percentage fee, while still requiring such operators to make payments based on a percentage of gross revenues; and for all other concessionaires, car rental companies and operators, waiver of the MAG monthly payments and other related fees, while still requiring payments based on a percentage of gross revenues.
The airport has the authority to extend the relief terms for an additional three months.
In Orlando, where Orlando International airport has also seen a 90% drop in passenger traffic in the two week period from March 28-April 8, the Greater Orlando Aviation Authority (GOAA) Board approved deferring approximately $17 million in payments due from airlines, in-terminal concessionaires and on-site rental car operators in May 2020.
Further actions will be presented and considered at upcoming board meetings.
Phil Brown, Greater Orlando Aviation Authority CEO, pledged that the Board would continue to review the situation for its concession partners and that this action was “the first step” in providing some relief, according to a statement released by the GOAA.
Orlando International Airport should receive $170 million from the CARES Act Airport Grant Program. This is the second highest grant behind Miami Inter-national’s $207 million.
Overall, Florida airports are scheduled to receive more than $896 million in federal assistance. The money is part of a $10 billion national outlay to 100 U.S. airports to help fund the continued operations of the nation’s airports.
The big change at Los Angeles International Airport allows concessionaire partners, which include DFS Group, Hudson and HMSHost, among others, to pay percentage rent rather than a minimum annual guarantee (MAG) from April 1 through June 30 as a result of passenger traffic declines due to the coronavirus pandemic.
The resolution was one of several approved on April 16 by the LAWA Board of Airport Commissioners.
In its argument for the resolution submitted to the BOAC on April 9, airport management said in part:
“Due to the decline in passenger traffic, concession sales have fallen below the percentage rent threshold, and all concessionaires are now subject to MAG rent payments.
“At this time monthly guaranteed rent payments now greatly exceed monthly total sales. Paying MAG rent in excess of their monthly earnings, in addition to paying required salary and benefits with depleted earnings is not sustainable for our concessionaire business partners.”
Traffic for the first week of April was down roughly 95% compared with the previous year, said management in its report.
The resolution also approved a revision of the payment terms for all concession agreements listed on its Attachment 1 to allow deferral of payment of percentage rent until July 1, 2020 through December 31, 2020 in equal monthly installments, among other provisions for car rental companies and airline terminal tariffs.
LAX will receive $323.6 million from the CARES Act, to help cover costs, including debt service payments, payroll and other operating expenses. Van Nuys Airport (VNY) will receive $157,000.