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Tenants at airport get break on debts

by Noel Oman | April 22, 2020 at 1:50 a.m.

Bill and Hillary Clinton National Airport/Adams Field will provide some tenants relief on what they owe the state's largest airport after their revenue evaporated when passenger traffic plunged as a result of the coronavirus pandemic.

However, the airport said that, for now, no relief will be extended to the airlines serving Clinton National, where daily departures have fallen to a dozen from of high of 41 in February before the outbreak.

The Little Rock Municipal Airport Commission on Tuesday approved a proposal to suspend the requirement that certain tenants pay a minimum annual guarantee, which is divided into monthly payments. Other airports around the nation have been adopting similar measures.

HMS Host, the food and beverage concessionaire at Clinton National, is required to pay a minimum annual guarantee of $594,000, which works out to $49,500 monthly under the terms of its contract. Under the proposal, Host would likely pay less than 10% of that figure, or about $3,600 a month, based on the company's current daily revenue at the airport of less than $1,000.

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Only one of HMS Host's food and beverage spaces has been open in the airport.

Other tenants in line for the relief include the Hudson Group, which operates three retail outlets, now down to one; the rental car companies; the operator of the ATMs; and the three general aviation centers, also called fixed-base operators.

"The tenants are requesting relief due to the impacts of the covid-19 pandemic on our industry," Tom Clarke, the airport's deputy executive director, told the commission. "The impact has resulted in decreases in traffic of over 90%. Based on the latest numbers, it looks like it has bottomed out at 95% across the sector.

Passenger traffic is about 5% of normal levels at Clinton National and other airports around the United States.

Where once, about 3,000 people departed daily from Clinton National on average, it is down to 186, which means only 12 to 15 people are each of the 12 flights leaving the airport, according to Bryan Malinowski, the airport's executive director.

The commission voted 6-0 t0 endorse the relief package after Malinowski alleviated some concerns that Host and Hudson might be getting help under the federal coronavirus pandemic relief act. They are not, he said.

The relief is back-dated to March 1 and will be extended through April. The relief will be reviewed every two months beginning in May.

The minimum annual guarantees "will be reinstated by the commission once the industry has returned to more normal operations and conditions so merit," Clarke said.

The airport, meanwhile, lost about $450,000 in March, mainly because of a dramatic drop-off in parking fee revenue, and stands to lose an estimated $1 million this month, according to Malinowski.

That revenue shortfall could grow to $1.8 million monthly if passenger levels remain at existing levels, he said.

The airport is set to receive $25.1 million under a Federal Aviation Administration relief package for airports coping with the pandemic. The money will help shore up the shortfall in operating revenue into next year, airport officials said.

But airport staff members are taking a wait-and-see attitude about extending any relief to the airlines, which also have sought reductions in their landing fees and other costs associated with operating at Clinton National.

"The staff will continue to consider requests made by the airlines," Clarke said. " Our final recommendations will not be made until we better understand the financial impact of the CARES act and length of pandemic."

Each of the four major airlines at Clinton National -- American, Delta, Southwest and United -- received about $5 billion in federal coronavirus-related aid, Malinowski said.

"We expect them to pay their rents with that," he said.

Business on 04/22/2020

Print Headline: Tenants at airport get break on debts

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