"Minneapolis airport retail facing change"

Thursday, September 4, 2003

Airport retail facing change
BY MIKE HUGHLETT
The St. Paul (MN) Pioneer Press


The Minneapolis-St. Paul International Airport moved Wednesday toward
adopting a new retail business model that may generate more cash - but also
may leave several hundred airport workers in limbo.

A committee of the Metropolitan Airports Commission voted Wednesday to allow
the airport's restaurants and stores to be operated much like a shopping
mall, where individual tenants run retail operations, each with its own
complement of employees.

Currently at the Twin Cities airport - and many other airports - the
majority of retail operations are run by the same company - a "prime" or
"master" concessionaire. HMSHost has been in that role at the Twin Cities'
airport for more than 20 years, and has more than 600 workers.

Those workers will get virtually no job protection if HMSHost fails to hold
onto its airport contracts in the new bidding process approved by MAC's
management and budget committee. The full airports commission usually goes
along with committee votes.

The new bidding process would allow for more competition: Developers would
go head to head with HMSHost for prime retail space.

If HMSHost loses its business, its employees would lose their jobs. In that
case, HMS workers could reapply for a post with a winning bidder. But
workers and the union that represents them claim that many would end up
taking cuts in pay and benefits.

The airport management and budget committee voted Wednesday to essentially
give points to bidders who - in their bids - spell out their employment
policies.

The committee also said bidders would be looked at favorably if they agreed
to host a job fair for existing airport employees.

But the committee did nothing to protect the jobs or the pay and benefit
standards for existing employees, many of whom have worked at airport
restaurants and bars for years, said Jaye Rykunyk, head of Hotel Employees
and Restaurant Employees Local 17.

"There's nothing that says that they (bidders) would have any obligation to
displaced employees," she said. "It's a huge mess."

HMSHost - and the airport commission itself - have long been lauded in the
concession industry for the quality of the Twin Cities airport's retail
operations.

However, the airport commission also has been criticized by the state
legislative auditor for not making enough money on its concession program,
as well as for not competitively bidding out HMSHost's contract for more
than 20 years.

The airport commission could have decided to simply charge more rent to
HMSHost, and allow for more competitive bidding on its master contract.
However, airport commission staffers believe shopping mall-style developers
can generate even more revenue than concessionaries like HMSHost.

They argue that the shopping mall model inherently leads to more competition
for the retail dollar, which in turn will lead to more cash in the airport's
coffers.

Earlier this year, commission staffers recommended simply replacing the
concessionaire model with the shopping mall model. However, airport
commissioners have adopted a hybrid of the two systems.


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