DFW Airport gave $50 million in rent breaks to stores and eateries, but the pain isn’t over for some

Luxury wallets were hard to sell at DFW International Airport during the darkest days of the COVID-19 pandemic last year.

And it’s still tough for Duty Free Americas, which operates luxury retailers like Mont Blanc, Kate Spade, Michael Kors and Coach in the international terminal.

“The vacationers are not the kind of customers we normally serve,” said Denise Erickson, general manager for the aviation division of the Hollywood, Florida-based retailer. “They are international flyers, usually those from abroad.”

Airlines

North Texas airports raised more than $ 740 million in COVID-19 stimulus funds

DFW International Airport has raised more than $ 611 million in stimulus aid grants in the past 16 months. Dallas Love Field, the home airport of Dallas-based Southwest Airlines, brought in $ 57.9 million from the latest stimulus package, bringing the total number of the city-owned and operated airport to $ 127.2 million.

DFW International Airport has invested $ 50 million over the past 19 months to ensure shops and restaurants like Duty Free Americas didn’t go empty and bankrupt when passengers were ready to fly.

For most, those rental discounts ended in late September, but DFW is working to approve an additional $ 20 million in rental savings for tenants in Terminal D, which is where most of the airport’s international departures take place. That would help tenants from October to March.

As of March 2020, shortly after the U.S. pandemic hit, airport operators cut minimum rental prices for shops, restaurants and services, instead taking in just a percentage of sales. For many businesses that remained closed during the entire pandemic, this often meant not paying any rent at all. Other stores that returned with lower sales or that had to reduce their opening hours due to staffing problems also paid less rent.

“It was a better plan than letting her go and having an empty room,” said Ken Buchanan, executive vice president of revenue management and customer experience at DFW. “We wanted to support them because all of these things that happened weren’t their fault.”

On Friday, travelers pass a coach shop with handbags and rucksacks in Terminal D of DFW airport.(Tom Fuchs)

The COVID-19 pandemic was a roller coaster ride for airports across the country, with traffic ebbing and flowing at dramatic rates with the whims of the virus. And for airport companies, who raise thousands of dollars and sign long-term leases, it has sometimes been difficult to stay open at the airport with fewer passengers.

The rental concessions were also somewhat selfish for the airport management. It takes a lot of work to bring new shops and restaurants into the airport, especially in a public tendering process for space. If hundreds of shops and restaurants were to cancel or fail to lease, there would be no convenience for passengers when they are picked up again.

DFW got a lot of help in realizing the rental discounts. DFW was among the largest recipients of federal funding, raising more than $ 611 million in the past 19 months. At least $ 30 million of this was made available specifically for concessionaires such as retailers and restaurants.

Airlines have also received help. The airport cut landing and take-off fees so airlines would only pay about as much as they did per plane in 2019 before the pandemic. The airport also cut gate and terminal rental fees to keep airlines afloat when many were in the financial crisis. DFW cut all airline fees to $ 0 for the month of September at an estimated cost of $ 7.7 million.

There are 195 shops in the DFW, mainly shops and restaurants as well as services such as shoe shine, money changers and masseuses. Typically, airport companies pay a percentage of revenue to the airport, around 16% on average, but this varies depending on the type of company. There are minimum rent payments as well, but this is rarely important as viable businesses make enough to pay the percentage of the sale price.

Almost 90% of retailers and restaurants are now open, Buchanan said, and the goal is to have them all reopened by the end of the year.

Nowhere will this be a greater challenge than in the international terminal, the crown jewel of DFW International Airport with its seating restaurants, duty-free shops and high-end retailers. For 2021, DFW’s total passenger traffic is still down around 22% so far, much better than many competing airports like Los Angeles International or JFK International in New York. However, international flights are worst affected as travel restrictions still apply in most regions of the world.

International traffic was 45% lower in the first seven months of 2021 than it was in 2019. And most of that traffic is Americans flying to recreational destinations in Mexico and the Caribbean.

These aren’t the high-end travelers that retailers and restaurateurs rely on.

Airport retailer Hudson, which operates newspaper stands and restaurants at the airport, said DFW started offering rental discounts earlier and more aggressively than other airports across the country.

“You were a role model for everyone else,” said Brian Quinn, Hudson’s executive vice president and vice CEO.

Dallas restaurateur Michael Bugatti has three of his four DFW airport restaurants in Terminal D. He had to close two of them during the worst pandemic, but has since reopened one. The last one, Whitetail, is transformed into a different concept.

“I don’t know where I would be now without her,” says Bugatti of the rental discounts.

Wine crates are available in the TRG Duty Free Shop in Terminal D, buy one and get one for free.(Tom Fuchs)

That summer, as passenger traffic recovered enough for restaurants and retailers to begin reopening, many, including Bugatti, faced massive labor shortages. Many began offering hiring bonuses of $ 300 to $ 1,000 to get employees back to work at the airport. It was more of a challenge because other customer service companies are also recruiting and airport employers have the added hurdle of commuting employees to the airport and the terminal.

The airport tried to streamline the process by offering a single application for each company at the airport. Bugatti said it was better, but he could use 50 more employees.

“The customers are back and they are happy,” said Buggati. “We just need more workers to serve them.”

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