The relief package would waive rent and fees for two months for restaurants and stores. Beginning in June, those concessionaires would pay base rent only.
O’Hare and Midway Airport concessionaires that have shut down or seen their revenues plummet because of the coronavirus would get some relief under a mayoral plan advanced Friday.
Normally, airport concessionaires pay the city a percentage of sales or a “minimum annual guarantee” based on sales the previous year, whichever is greater.
That is no longer possible. The coronavirus has devastated the travel industry and the airport concessionaires that depend on crowded airports.
The relief package, championed by Mayor Lori Lightfoot and advanced Friday by the City Council’s Aviation Committee, would serve as a temporary life raft for Midway and O’Hare concessionaires that agree to keep their employees.
It would waive rent and fees for two months — April and May — for restaurants and stores.
Beginning in June, those concessionaires would pay base rent only. The “minimum annual guarantee” would be deferred. It would need to be paid back at no interest when a concessionaire’s sales recover to 75% of last year.
If sales are still depressed when the minimum annual guarantee is readjusted in January, the relief will continue until the 75% benchmark is reached.
Advertiser and internet providers Clear Channel, JC Decaux and Boingo Wireless would get a two-month rent waiver.
For rental car companies at O’Hare and Midway, the city is offering to waive the minimum annual guarantee or base rent for the months of April, May and June. Rental car companies will continue to pay percentage rent, facility rent at O’Hare only and customer facility charges passed on to passengers as part of the cost of renting a car.
Aviation Commissioner Jamie Rhee portrayed the relief package as “more generous” than any offered by other major airports because repayment of the deferred rent could be extended for as long as three years.
She noted the concessionaires have not received help from the waves of federal stimulus programs approved by Congress.
“We have been very liberal in working with our concessionaires. If they want to close, we’re letting ’em close,” she said.
Rhee pegged current concession operations at 30% at O’Hare and 10% at Midway, in part, because of an early cluster of coronavirus cases at the Midway control tower that “significantly reduced flight activity before we saw the overall industry start decreasing.”
“It fluctuates day-by-day. There was one concessionaire that actually came to me and said, ‘Three weeks ago, we were thrilled that we made $600 a day. … And last Friday, we made $2,000.’ It’s not where they should be. They were at $10,000 last year. But it was certainly in the right direction.”
American Airlines Chairman Doug Parker told analysts last month that industrwide revenue has fallen about 95% from what it was in April 2019. Parker predicted the recovery would be slow and “demand for air travel will be supressed for quite some time.”
Boeing Chairman David Calhoun has predicted at least one major airline would go out of business because of the coronavirus.
On Friday, Rhee told aldermen that domestic travel will bounce back first.
“But we don’t know if that’s gonna be 50% by the end of the year or by spring of next year or that will be 75%. So we wanted the flexibility to tie [this relief] to actual revenues to trigger repayment. And that’s up to three years,” she said.
Ald. Roberto Maldonado (26th) complained some concessionaires are no longer providing health insurance to their employees. He urged Rhee not to offer any kind of relief to concessionaires until that insurance is reinstated.
Rhee promised to look into it. But she said her primary goal is employee retention.
“We’re gonna … continue to work with them. And any obligation they have to the city that we can enforce, you know we will,” the commissioner said.