"MIA's Central Terminal shops battle for turf as airport seeks new tenants"

Monday, April 16, 2012

MIAMI INTERNATIONAL AIRPORT
MIA’s Central Terminal shops battle for turf as airport seeks new tenants
By Martha Brannigan
The Miami (FL) Herald


Miami International Airport’s Central Terminal is emerging as one of the
latest battlefields for lucrative county contracts.

While the aging terminal handles just 10 percent of MIA passengers, shops
and restaurants there are fighting to hold onto their turf as airport
executives urge the Miami-Dade Commission to seek new bids for the space.

Aspiring concessionaires and others — including the airlines — want fresh
competition in a venue where some businesses have held a grip for as long as
19 years. 

“The perception is when contracts for concessions end, they never really
end,’’ Miguel Southwell, MIA’s deputy director for business, told
commissioners at a March 29 workshop. “The Central Terminal has some of the
finest concessions you will find. We’re not talking about them doing a bad
job. It’s just a matter of creating an opportunity for competition.’’

With the Central Terminal targeted for redevelopment over the long term,
airport administrators envision offering four-year contracts with options
for four, one-year extensions for concessions in the space, which houses a
host of carriers, including Delta Air Lines, AirTran Airways and British
Airways. 

“We’d like an opportunity to look at the Central Terminal and provide you
with the best bagels in the country,’’ Brian Bowdish, vice president of
Brooklyn Water Enterprises in Boca Raton, told commissioners. 

“You have an opportunity to increase non-aviation revenue,’’ added James O.
Burchett, a vice president at AvAirPros, which represents MIA carriers. “The
airlines ask you to move forward and put the contracts out to bid.’’ 

The more revenue the county-owned airport gets from concessions and other
non-aviation sources, the lower the landing fees and other charges the
airlines have to pay. 

But the incumbent restaurants and shops are lobbying hard against such a
move, arguing the Central Terminal’s future redevelopment is too uncertain
to look for new tenants.

 “This is not the time to go to public solicitation,’’ said Raymond J. Kayal
Jr., president and CEO of NewsLink, a fast-growing Miami-based
concessionaire with stores in the Central Terminal and elsewhere in the
airport. It would be hard for businesses to bid for a Central Terminal
contract without a vision of when and how it will be rebuilt, he said.

Brenda Rivers, president and CEO of Carrie Concessions, told commissioners
she works as a “business partner’’ with the airport and converted her
mom-and-pop restaurants in the Central Terminal to brand-name outlets like
Dunkin’ Donuts, Häagen-Dazs and Subway that generate higher revenue. 

Rivers, who has had businesses in the terminal for 19 years through contract
extensions, urged commissioners to give tenants more time before seeking new
bids — “at least three years to grow in stature and grace together.’’

The shops and restaurants in the underutilized Central Terminal, which
connects the North and South, have endured protracted disruptions during the
North Terminal construction. For a long time, a construction wall forced
passengers outside the Central Terminal when walking between north and south
— steering them away from pre-security shops and restaurants.

“You have a place without a lot of [passenger] volume. We suffered while
construction was going on. It doesn’t make sense’’ to put the concessions
out for bid, said Jose Alberni, a managing director and co-founder of MCA, a
Miami-based concessionaire that runs the Chili’s To Go in the Central
Terminal, among other outlets, and wants more time to recover its investment
in the terminal.

But the tenants have gotten breaks, too. Concessions, which share revenue
with MIA, usually pay a minimum annual guaranteed rent, but the commission
last December eliminated that so-called MAG for various Central Terminal
tenants, while extending their stay through next January.

Southwell and aviation Director José Abreu had hoped to solicit bids for the
Central Terminal concessions before March 31, but the commission, facing
pressure from tenants, is taking more time to decide what to do. 

At the workshop, commissioners listened to the incumbents and those aspiring
to get a toehold at MIA, but offered no conclusions on the issue.
Commissioner Bruno Barreiro, who chaired the Regional Transportation
Committee workshop, said he is considering asking Commission Chairman Joe
Martinez to bring the issue before the full board.

 “Not so much the concessions, but what are we going to do with the Central
Terminal?’’ Barreiro said. “That determines the issue of the concessions.’’

 Over the long term, the airport envisions redeveloping the Central Terminal
to bring it up to par with the north and south sides. 

According to director Abreu, that could cost between $2.5 billion and $4.5
billion. But no one knows at this point what it would look like or how it
would be paid for. 

The airport, already saddled with heavy debt, would likely have to consider
a public-private partnership or some other alternative financing scheme. MIA
administrators estimate the airport will need a new Central Terminal by
2021.

Incumbent shopkeepers say they’ve already made investments in their stores,
but newcomers won’t want to come in knowing the terminal may be under
construction in a few years. 

“The airport is going to lose revenue at the end of the day because of an
interruption of service. And passengers are going to be inconvenienced,’’
said Chris Korge, NewsLink’s chairman. “Until plans become more concrete and
we can come up with fresh new concepts, this is all premature.’’ 

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