USA. The board of Dallas Fort Worth International Airport last night ratified a crucial plan to move commercial partners from Minimum Annual Guarantee-based (MAG) fee models to a rent structure based on a percentage of sales. The scheme, which offers relief for hard-pressed retailers and F&B operators, is backdated to 1 March and will run until 30 September. We first reported on the proposal last month.
Documents from the board meeting stated that the move would reduce revenues to the airport by between US$45 million and US$55 million in the period.
Separately, the board ratified a change to the structure of the duty free contract managed by 3Sixty Duty Free, also effective from 1 March. The new contract features:
*Percentage rent of 20% on all gross receipts, for all locations, with the exception of allowances and artwork, for the remainder of the lease term.
*The percentage rent agreement applies in lieu of MAG at the North Duty Free store (Terminal D) until 31 December 2020. On 1 January 2021 the location will have the MAG reset to 75% of the prior year total rent. The MAG will be reset no higher than the current level, but will be subject to 3% annual increases as per the Lease Agreement.
*The closure of several other locations under the lease agreement in Terminal D until 31 December. These include specialist stores Whiskey Flight and Timeless Travel, among others.
In additional assistance for business partners, the airport will defer collection of April and May operating and maintenance expenses until July, August and September. The estimated cash flow impact on the airport will be around US$1.8 million.
The airport company also last night confirmed US$40-50 million in operating expense reductions for this year, as well as the suspension of US$100 million in spending on “non-mission critical” capital projects.
Commenting on the impact of the crisis, CEO Sean Donohue said that daily passenger numbers are around 20-30,000, compared to an average of 200,000 per day last year, with flight activity down by -50%. International traffic has fallen further, with just 200 to 400 arriving passengers a day, compared to 10,000 under normal conditions.
The revenue impact is expected to be between US$175 million and US$225 million, or down by about -40%, in the second half of the financial year through to 30 September.
Donohue added that plans for the new American Airlines-dedicated Terminal F would be revisited, but that no decisions had yet been taken.
