Businesses at LAX Seek Financial Help From City

With sales down as much as 50% since the terrorist attacks, restaurant and gift shop operators at Los Angeles International Airport asked the city Tuesday for financial relief.

A coalition of 10 companies, owned by minorities and women, that operate about 20 shops asked the Airport Commission to change the formula it uses to calculate fees paid by concessionaires at LAX.

Currently, shops and restaurants must pay a guaranteed minium plus a percentage of gross sales above that. They are asking to eliminate the minimum and only pay a percentage of sales.

“We’ve lost thousands of dollars in the past couple weeks and laid off workers, and now there’s a threat we will have to close our businesses,” said Manuel Soto, who was speaking for the coalition. He operates two I Love L.A. gift shops under a contract with WHSmith.

WHSmith holds the city contract for the majority of retail and gift shop services at LAX. The company, one of the largest airport concessions operators in the world, also will ask Mayor James K. Hahn and the Airport Commission for financial relief, said Clark Davis, a spokesman for WHSmith.

A steep decrease in passengers and new Federal Aviation Administration rules that allow only ticketed passengers past security checkpoints caused sales at LAX shops and restaurants to drop sharply since Sept. 11, prompting numerous layoffs.

Sales at duty-free shops, all of which are located beyond security checkpoints and cater to international visitors, are down as much as 53%. Asian tourists, who account for the bulk of sales at many of the shops, have virtually disappeared, retailers said.

“I’ve been through the Gulf War, the Los Angeles riots and the Asian financial crisis, and I’ve seen how those impacted international travel,” said Betty Dixon, whose company operates two duty-free shops. “But this is the worst of all those events.”

Some concessionaires also asked the commission to drop a requirement listed in their contract that they periodically remodel their stores.

Clarence Daniels, who operates six restaurants at the airport as a subcontractor to HMSHost Corp., said he can’t afford to spend the $371,000 required under his contract to spruce up his shops in the Tom Bradley International Terminal and Terminal 6.

Concessionaires also asked for contract extensions, so they could spread their costs over longer periods.

Any relief to the subcontracts would have to be done through the three primary contractors for restaurants and shops at LAX.

In response to the requests, the commission said it would form a subcommittee to study the issue with the city agency that operates the airport. The airport agency was skeptical about its ability to provide financial relief to concessionaires, citing its inability to recover these costs from the airlines.

But concession operators said LAX should study relief programs at San Francisco, Denver and Dallas/Fort Worth international airports.

In San Francisco, the Airport Commission voted last week to modify its contracts with concessionaires to allow them to pay a percentage of their gross sales, from 6% to 17% depending on the type of business, said Ron Wilson, an airport spokesman.

“Hopefully, this will enable our tenants to survive,” Wilson said. “Without this, many would have been out of business in 30 days.”

The program will cost the airport $1.5 million, he added.

In Dallas, airport operators waived rent obligations for concessionaires from Sept. 11 through Sept. 30, canceled fees for marketing and deferred all capital expenditures required in airport leases until the next fiscal year, spokeswoman Tina Sharp said.

Denver airport officials are making $4 million in low-interest loans available to concessionaires who can demonstrate a financial need, said Chuck Cannon, an airport spokesman.

Unlike LAX, Dallas and Denver airports can require their airlines to make up revenue losses.