LAX AND ONTARIO AIRPORT CONCESSIONS GET TEMPORARY RELIEF PROGRAM

12/04/2001 12:00 AM

LAX AND ONTARIO AIRPORT CONCESSIONS GET TEMPORARY RELIEF PROGRAM

 

(Van Nuys, California -- December 4, 2001) The Los Angeles Board of Airport Commissioners tonight approved a Concession Relief Program to provide temporary cost relief to concessionaires at Los Angeles International Airport (LAX) and Ontario International Airport (ONT), who have experienced revenue losses as a result of the drop in passenger travel following the September 11 terrorist attacks.

The Concession Relief Program is comprised of temporary rent reductions and capital investment deferrals estimated at $9,473,000 for the last four months of 2001. Los Angeles World Airports, the City of Los Angeles department that owns and operates LAX and ONT, as well as Van Nuys and Palmdale Regional Airports, estimated in its Fiscal Year 2001-2002 operating plan concession revenues totaling $147.2 million.

The two airports operate comprehensive concession businesses that include food and beverage, gift and news, duty free sales, rental cars, and a variety of other concession services. These services are located throughout the nine passenger terminals at LAX and the two terminals at ONT.

Following are the components of the Concession Relief Program:

 

  • For the period September 11 through14, the minimum annual rent guarantee will be credited for these days. This covers the period when the Federal Aviation Administration grounded all airline flights and suspended airline service for two days and the airlines took another two days to reposition their aircraft in order to resume scheduled service.

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  • For October through December 2001, rent will be reduced to the percentage of gross sales set forth in each concession agreement, excluding the year-over-year impact of the decline in sales volume experienced through August 2001 year-to-date.
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  • All contractually required capital investments will be deferred for one year to ease cash flow requirements while passenger enplanements build back to normal levels.

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  • LAWA will assist Disabled Business Enterprises and small business in obtaining U.S. Small Business Administration loans.

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  • The original contract provisions for payment requirements resume January 1, 2002.

In order to participate in the Concession Relief Program, each concessionaire will be required to comply with several conditions, including compliance with all applicable City ordinances and commitment to increasing its staffing commensurate with an increse in passenger enplanements.

This Concession Relief Program is designed to help mitigate the severe impacts on concession sales resulting from an average 20 percent decline in airline scheduled service, a 26 percent reduction in domestic passengers and a 34 percent in international passengers from October 2001 compared to October 2000. As a consequence, many concessionaires have laid-off staff and/or reduced employee work hours. Approximately 400 concession personnel were laid off at LAX and 15 concession workers at ONT.

 
 

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