By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
Take, for example, the case of American Airlines' rent at the airport. Though American is the airport's largest tenant, occupying some of the most valuable real estate in Texas, they haven't had to pay any rent since 1996. In fact, they received a $6.2 million rent rebate last year and are expecting another juicy rebate check this year. The reason for the windfall is the new concession program. The 1968 use agreement between Dallas and Fort Worth that created the airport stipulates that concession revenue be used to offset the airlines' rent. The revenue is apportioned according to how many passengers each airline boards.
Walker says he feels the board is too weak to challenge the use agreement. "I don't believe the original intent of the agreement was to allow the airlines to be there rent free and get money back," he says. "I think it amounts to a huge gift of public funds."
The use agreement also prevents the airport from retaining earnings at the end of the fiscal year. If the airport makes a profit, the money must be returned to the airlines, whose landing fees and rent finance the airport budget. In 1995, for instance, the airlines received $11 million in refunds. The airlines are responsible for making up the difference if the airport has a shortfall, so on the surface all appears equitable. But as a former airport employee points out, the problem comes in the way the airport budget is figured.
"The airport should anticipate profits and plan the budget accordingly," he says. "There are plenty of projects they could budget for, building a parking garage, improving the railroad transit project."
The problem as Walker sees it is that the airlines have taken control of the airport budget process. According to a deposition he took of Janice Davis, the airport finance director, the airport devises the budget then submits it to the Airline Advisory Board, which comprises representatives from all the airlines. The Airline Advisory Board then submits the budget directly to the airport board for its approval.
American and Delta also made a tidy sum when they allowed the airport to convert some of their terminal space into concessions. In 1995, the two airlines sold back their space to the airport for approximately $4 million and $2 million respectively. That cost was then passed on to the concessionaires, in the form of a space acquisition fee, which they had to pay in addition to their rent. The space acquisition fees covered the airlines relocation costs, plus a hefty markup, according to Walker.
Unfortunately, many of the concessionaires have not fared as well as the airlines. They complain that they are having trouble making money because of the high cost of doing business at the airport. Tony Reed, who owns a Mexican restaurant in Terminal 2E, says that unlike Robert Crews, many of the concessionaires who leased space after him were well aware of the space acquisition fees. "We didn't mind paying it, because we thought we were going to be able to make money. But many of us can't even meet our expenses. Now, a lot of us are wondering how fair the space acquisition fees really were."
Reed says another problem is that the airport overbuilt the concessions by 20 percent. Several concessionaires have been forced to ask the airport for rent relief, while others have asked for lease extensions without rent increases. Reed says that the airport also recently allowed concessionaires to raise their prices, from 5 percent to 10 percent above street-level prices.
Former Dallas City Council member Jerry Bartos has never been shy about leveling criticism at D/FW and American Airlines. But when he heard about American's free rent and the problems the concessionaires are having, he was even more incensed than usual. "This airport is managed for the biggest airline, not for the traveling public or the people who own it," Bartos says. "Every airport doesn't do it that way. The mayor and the board at Atlanta's Hartsfield Airport are not so practiced at bootlicking."
When the airport first set up its new concession program, the board was clear that it wanted local minorities to be included. The program, largely, has been a success. More than 50 percent of the terminal concession contracts awarded under the new program have gone to minorities. The problem, says Walker, is that "'local' is a buzzword for discrimination and cronyism."
At least one other concessionaire says he had an experience similar to Crews; when he couldn't consummate a partnership with a minority the staff recommended, he lost his permit. In the mid-1990s, Jeff Haynes, a white California businessman, had a temporary permit to operate several airport shops that sold luggage on wheels. His business grossed about a $1 million annually. He says the airport staff told him the only way he could continue doing business at the D/FW was if he brought in a local minority partner.
The staff suggested Gilbert Aranza, who has numerous restaurants at the airport. When negotiations broke down, Haynes formed a partnership with Jim Rodriguez, a dentist, who also had been recommended to him by the board staff. Haynes claimed that Mario Trevino, head of the airport's department of minority affairs and economic development, dragged his feet in approving his partnership. Although Trevino eventually signed off on the agreement, Haynes says that Pat Gleason, head of airport concessions, told him it was too late and canceled his permit. Gleason then turned around and, without seeking bids for the space, gave Aranza several of Haynes' concession locations. He used them to open Fossil watch franchises.