Airport concessionaires
deserve rent relief,
hired consultants say

---

By Russ Lynch
rlynch@starbulletin.com

Consultants hired by concession operators at Honolulu Airport told a legislative hearing yesterday that times have changed so enormously that concessionaires should not be forced to pay minimum rents they promised when times were good.

"We believe that the current market cannot support the rent payments," said Paul Gaines from Houston, Texas, who has managed airports on the mainland and served as chairman of an international association of airport managers.

Honolulu has been hit hard because of the airport's design, he said. "We can no longer have meeters and greeters and godspeeders beyond the security checkpoint," Gaines said. That has been very hard for concession operators in the airport wings and other areas beyond the check-in area, Gaines said.

The airlines have been helped twice in recent years by landing-fee waivers, but concessions have been required to stick to minimum rents they promised in prior bids, he said.

Because of the combination of a drop in international travel and increased security measures, duty-free revenues are down more than 33 percent from last year, retail sales at the airport are down 22 percent and flower sales are down more than 28 percent, Gaines said.

It would be hard to replace the current concessions because "bidding in this climate of today has to be very, very risky," Gaines said.

He said he supports a measure moving through the Legislature that would allow the state Department of Transportation to waive minimum rents when times are bad for reasons beyond Hawaii's control and instead allow operators to pay a percentage of their rent.

Roger Bates, described as an expert on airport financing who has spent most of time as a consultant with the accounting firm KPMG LLP, said it would not be unusual for the state to forgive some of the concession fees and there are "ample precedents around the country in the airport industry for providing relief."

He said several major airports have been willing to waive contracts based on bids offered when times were better and have sat down and renegotiated the minimum terms "to reflect the new business environment" that followed 9/11 and is now worsened by the war in Iraq.

He said Hawaii "has been extremely generous and helpful to airlines in times of stress" and now should consider the concession operators in the same light, since they have provided the majority of the funding for Hawaii's airports for decades.

Former airports manager Owen Miyamoto said the concession arrangements supported the statewide airports system over the years and the concession holders at Honolulu Airport essentially paid for the new terminals at neighbor island airports such as Kahului.

"Honolulu was the big cash cow," Miyamoto said. He said he supports the idea that there should be some relief for the concessions that made all the improvements possible.