Airport Contracts Extended

Despite travelers’ poor reviews of the shops and restaurants at Los Angeles International Airport, the city’s Airport Commission on Monday unanimously approved the extension of lucrative concession contracts without discussion or debate.

The extensions, which were approved as several powerhouse City Hall lobbyists looked on, allow operators of duty-free shops, newsstands, bookstores and McDonald’s restaurants to continue serving millions of passengers at the world’s fifth-largest airport for up to two years.

The contracts would not have expired until the end of May, after the May 17 runoff mayoral election between incumbent James K. Hahn and Councilman Antonio Villaraigosa. But airport officials hurriedly placed the extensions on the commission agenda at the end of last week.

Airport officials said they had not put the contracts out to bid because they recently embarked on a two-year process to overhaul LAX’s underperforming concessions program. Travelers consistently give the shops and food choices poor marks.

Yet the concessions are so lucrative that the airport earned as much as $45 million a year from the arrangements. The contracts are essentially monopolies and are so highly prized that the major concessionaires hire lobbyists and make campaign contributions to city officials, including Hahn. The mayor appoints the seven-member Airport Commission.

John Ek, a prominent airport lobbyist whose clients include McDonald’s, said after the vote that he had co-hosted a $1,000-per-person fundraiser for Hahn last Wednesday in San Pedro and that he helped raise money for the mayor last year.

Ek confirmed that he had appeared a year ago before a grand jury investigating pay-to-play allegations that campaign contributions may have influenced decisions on city contracts.

Julio Ramirez, another lobbyist and Hahn contributor, represents the Hudson Group, which operates bookstores and newsstands at LAX.

Ramirez is the husband of Annette Castro, one of Hahn’s chief fundraisers. The Hahn campaign paid Castro more than $200,000 for her fundraising and campaign consulting activities in recent years, according to Hahn’s campaign finance statements.

The New Jersey-based Hudson Group acquired the North American airport retail business of W.H. Smith in December 2003. Atlanta-area executives of W.H. Smith contributed $22,000 to Hahn’s mayoral campaign in 2000. The company’s LAX concession contract was extended without competitive bidding after Hahn was elected.

W.H. Smith also gave $50,000 to Hahn’s L.A. United campaign to defeat the secession of the San Fernando Valley.

The Hudson Group contract was extended to May 31, 2006, with the option for another one-year extension.

The contract with DFS Group to operate the airport’s Duty Free Shops was extended until Nov. 30, 2007. DFS executive Joseph Lyons and two lobbyists, Richard Lichtenstein and attorney Ellen Berkowitz, were at the commission meeting.

On the same 6-0 vote, the commission extended the concession contract of attorney Andy M. Camacho, who operates two Mexican restaurants at the airport. Camacho has contributed to both of Hahn’s mayoral campaigns. He also gave $1,000 to the mayor’s legal defense fund last month.

Contracts for coffee concessionaire Java Java and food and beverage concessionaires Eurotal and Creative Croissants were extended to May 31, 2007.

Travelers consistently give poor grades to the airport’s concessions. Sales at restaurants and retail outlets also rank below the industry average.

In 2003, LAX shops and restaurants earned $6.17 per passenger, 27 cents less than the industry average of $6.44. Other major U.S. airports, including John F. Kennedy International in New York, San Francisco International and Miami International Airport, earned above the industry average. The figures do not include sales at duty-free shops.

Karen Tozer, the new concessions manager of the city’s airport department, said a study would help guide decisions at LAX for the next 10 to 15 years. Tozer said some cities’ airports have fabulous food and beverage outlets and stores. She said Los Angeles deserves the same.

The Airport Commission last month awarded a $622,000 contract to conduct the concession study. The consultant will evaluate the existing stores and restaurants and devise a new approach, including themes and a tenant mix to maximize space-constrained facilities.

The city’s airport agency hasn’t taken a broad look at its concessions program in more than a decade. The 133 sites at LAX are almost evenly divided between food and beverage locations and retail services. Many of the shops in the facility’s nine terminals are outdated. Consumer tastes have changed, requiring a new look to generate higher sales, airport officials told the commission last month.

The study’s completion date coincides with the expiration date of 70% of the contracts governing those shops. The city’s airport agency hopes to put each concession contract out to bid, hire new operators and build new storefronts by May 2007. The seven concessionaires whose contracts were approved Monday have more than 850 employees at LAX.

Times researcher Maloy Moore contributed to this report.