minimum annual guarantee airport
It may be necessary for an airport to close concession locations as they may close portions of the airport to reduce their operating costs. A. Airports should carefully consider how they structure deals and their business models to ensure more flexibility to respond to potential future shocks. interfere with airport access, impact security for the traveling public or aircraft operations, and can be done in a way that allows for social distancing and other protective measures. Future-facing businesses are embracing all-in-one solutions for rates, tariffs and rules. Six options for how to ensure that the airport concessions industry continues to be a robust and vibrant business for all. In addition to increased cleaning protocols, In consideration of the reduction in passenger volume at, DEN has altered rent structures for concessionaires, rental car operators and airline partners in order to ease financial difficulties brought on by COVID-19. If an airport operator closes a concourse or a terminal, it would need to eliminate some concession spaces from its contracts, which may render some deals no longer viable. Let’s consider six potential options. When one partner tries to do too much, it will lessen the benefits of the joint venture. Airport tenants were offered six months of deferred Minimum Annual Guarantee (MAG), from April – September 2020. 1 to the International Terminal 5 Food and Beverage Concession Lease No. Each contributes its expertise, capital, and support to result in a uniform, consistent, and superior customer experience throughout the passenger’s journey. As a result, if concessionaires produce lower sales because there is no traffic, it will result in space rental rates increasing. There are a few limitations, however, that make this a less than optimal solution. 140 Resource Manual for Airport In-Terminal Concessions 9.3 Concession Fees Concession fee payments to the airport operator are often based on the greater of a fixed min- imum payment (the minimum annual guarantee, or MAG) or a percentage(s) of the concession- aireâ s gross receipts from sales, as defined in the concession agreement. (Added 3/27/20), Concessionaire partners at LAX will pay percentage rents rather than a minimum annual guarantee from April 1 through June 30. How involved the airport gets in the day-to-day operation is the option of the airport and their partner(s). Greater Toronto Airport Authority staff indicates that contracts with partners are confidential and declined to provide information about rent. Rent abatement should be tied to the changed circumstances caused by the public health emergency, and done in accordance with Grant Assurances 22 and 24, as well as related statutes. Based on the latest fair market appraisal of the property, the County estimates a Minimum Annual Guaranteed Rent of no less than $120,000 per year. No one is sure how long recovery will take. From April through June, the airport has waived the MAG, switching to percentage rent as outlined in their leases, with those partners also being able to defer three months of rent until later this year, according to spokeswoman Alex Renteria. With a MAG based on enplanements, the airport accepts the risk of failing to deliver enough enplanements. Elsewhere, airports do not expect vendors to exceed their MAGs. The Trinity model can be considered an extension of the joint venture model. Salt Lake City International Airport (SLC) is waiving the minimum annual guarantee requirements through June 30, 2020, instead charging operators a percentage of gross sales. First, and potentially most important, the FAA’s position on rent abatements has gone from “NO” to: “A decision to abate rent (including ‘minimum annual guarantees’ and encompassing fees) is a local decision. The Great Hall renovation and gate expansion projects are continuing to move forward, to date, but all projects are still being analyzed. Nor do we know whether travel habits will change permanently because of new practices learned during lockdowns. or “MAG” means the minimum amount of money due City annually from Concessionaire in consideration of the rights granted Concessionaire under this Agreement. There are means of counting passengers who pass a concession location, but few airports have installed such technology. In airports with residual airline agreements, the airlines will be required to make up the difference between revenue to the airport and required revenue to pay for airport development and other expenses. A by-location per passenger MAG may be too complicated for widespread implementation at this point. Airports should consider alternative methodologies for managing and operating their concession programs for concessions to remain viable business options. (Added April 13), The Broward County Aviation Department is currently reviewing requests from concession operators at, Allow for payment of a percentage of gross sales rather than MAG fee during the consequential period. Hence, a fairer methodology for establishing a MAG is to base it on an absolute value per exposed passenger. The airport environment is complex and has become even more challenging due to COVID-19. The board also agreed to revise payment terms for non-concessionaire rental car services and created an airline relief program through which eligible carriers can apply for deferred payment of terminal use fees. Airlines value an attractive commercial program because it makes a better background for the expression of their brand. REPORTED GROSS RECEIPTS AND CONCESSION CALCULATION Yet one of the most severe barriers to entry, particularly for small businesses, has always been limited access to capital. As the COVID-19 pandemic continues, here’s what North America’s leading airports are doing to help ease the pain for concessionaires: Alternatively, you can give us a callor fax us any time: 6421 Congress Ave. Suite 107Boca Raton, FL 33487, Atlanta, GA – Hartsfield-Jackson Atlanta International Airport, Baltimore, MD – Baltimore/Washington International Thurgood Marshall Airport (BWI), Calgary, AB – Calgary International Airport, Columbus, OH – John Glenn Columbus International Airport, Dallas, TX – Dallas/Fort Worth International Airport, Denver, CO – Denver International Airport, Detroit, MI – Detroit Metropolitan Airport, Fort Lauderdale, FL – Fort Lauderdale-Hollywood International Airport, Kansas City, MO – Kansas City International Airport, Las Vegas, NV – McCarran International Airport, Los Angeles, CA – Los Angeles International Airport, Milwaukee, WI – Milwaukee Mitchell International Airport, Minneapolis, MN – Minneapolis-Saint Paul International Airport, Montreal, QC – Montreal-Trudeau International Airport, Nashville, TN – Nashville International Airport, Orlando, FL – Orlando International Airport, Ottawa, ON – Macdonald- Cartier International Airport, Philadelphia, PA – Philadelphia International Airport, Phoenix, AZ – Phoenix Sky Harbor International Airport, Portland, OR – Portland International Airport, Salt Lake City, UT – Salt Lake City International Airport, San Diego, CA – San Diego International Airport, San Francisco, CA – San Francisco International Airport, , CA – Norman Y. Mineta San Jose International Airport, Seattle, WA – Seattle-Tacoma International Airport, Toronto, ON – Billy Bishop Toronto City Airport, Vancouver BC – Vancouver International Airport, Washington, D.C. – Metropolitan Washington Airports Authority, Winnipeg, MB – James Armstrong Richardson International Airport, By continuing to use this site you consent to the use of cookies on your device as described in our, Hartsfield-Jackson Atlanta International Airport (ATL), Baltimore/Washington International Thurgood Marshall Airport (BWI), John Glenn Columbus International Airport (CMH), Dallas/Fort Worth International Airport (DFW), Fort Lauderdale-Hollywood International Airport (FLL), Minneapolis-St. Paul International Airport (MSP), Montreal-Trudeau International Airport (YUL).