"Hartsfield Must Pay Tenant $3.3 Million for Security Losses"

Friday, October 20, 2006

Airport Must Pay Tenant $3.3 Million
By David Pendered
The Atlanta (GA) Journal-Constitution


Atlanta's Hartsfield-Jackson International Airport must pay a company that
operates all the retail shops in the airport's Atrium $3.3 million because
their profits have declined since extra security measures were installed
after the Sept. 11, 2001, terrorist attacks, a Fulton County Superior Court
jury ruled Thursday.

The company pays the airport about $8 million a year to lease space for
about 16 shops. Jurors ruled that the airport should have reduced the rent
after sales dropped because the increased security measures caused fewer
passengers to drop in and buy merchandise.

Some jurors said they based their decision in part on an aviation security
law passed by Congress that included a provision urging airports to talk
with their tenants about adjusting their rents to account for lower profits.

Most passengers hurry past the Atrium's shops because they know they could
get stuck in a long line at the security devices, said Henry Chalmers, a
lawyer who led the trial team that represented three companies that filed
the lawsuit against the airport. The lawsuit requested $8.2 million.

The gleaming Atrium --- once billed as Atlanta's front door --- is no longer
a shopping mall where it's pleasant to pass time browsing in stores. Now
it's a place passengers rush through on the way to the security checkpoint,
Chalmers said.

"People want to get to the concourse just as soon as they can," Chalmers
said. "They don't shop in the Atrium."

Consequently, sales at the Atrium's retail shops have dropped by 23 percent,
according to the lawsuit filed in December 2004. It was brought by WH Smith
Airport Services, Airport Management Services and Hartsfield Air Ventures.
The first two companies have interests in Hartsfield Air Ventures, the
company that holds the lease.

Ben DeCosta, the airport's general manager, agreed in his testimony that
sales have dropped, but not by as much as the lawsuit contends. DeCosta said
that in 2004 he ended three years of negotiations over the amount to be paid
to the company for lost profits because the conversations were going
nowhere.

"It reached the point where we thought they were being greedy," DeCosta
said.

The companies were seeking to invoke a section of a contract that provides
for the airport to reduce the rent if the number of passengers boarding
planes drops because of any action taken by the federal or state
governments. But a lawyer for the airport, Robert Caput, said the companies
knew when they renewed the lease in 2000 that retail revenues at the
Atrium's shops were falling.

Caput said the companies "want to take advantage of a terrorist act ... to
get out of a bad business decision."

Chalmers said he didn't expect a spate of similar lawsuits against other
airports. Atlanta is unique in having a large retail area open to passengers
who have not been through a security gate. 

Juror Mia Long said she supported the companies' claim because of the
terrorism act passed by Congress and because the city's contract was vague.

"The contract was too broadly worded," said Long, an Atlanta resident who
teaches public speaking at Clayton State University. "The letter from
Congress said airports should have conversations about rent abatements."

Caput said the city will consider appealing the ruling. Any amount paid to
the companies will be drawn from the airport's funds, which do not include
any taxes collected from Atlanta residents, he said.

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