EDITORIAL: Airport vendors deserve a break

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IBJ Editorial

Concessionaires at Indianapolis International Airport, where passenger counts have tumbled 10 percent because of a slowdown in air travel, are asking the Airport Authority for relief from a policy that requires them to price their goods at a level consistent with what consumers pay at non-airport retailers. We agree the airport shops need a break.

We understand that allowing airport concessionaires to raise prices would burden consumers, who are also hurt by the economy. But relief from the airport’s so-called street-pricing policy is in order.

Airport retailers do have the advantage of dealing with a captive audience. But that’s where their advantage ends. Hours are long, getting workers and goods to the airport on a regular basis poses logistical problems, and the rent is almost double what retailers pay elsewhere.

The airport seeks to enhance the passenger experience by using locally known retailers who sell high-quality goods. And it wants those goods sold at street prices. Those goals are worthy, but accomplishing all three might not be practical.

The concessionaires and the Airport Authority are working through these issues, and the airport already has offered some relief by suspending through the end of the year a monthly fee retailers have to pay in addition to rent.

We hope the Airport Authority is serious in considering long-term relief as well. For example, retailers could be allowed to charge a certain percentage above street pricing, which would keep prices in check while providing enhanced revenue potential.

Ultimately, retailers at the airport must be given the opportunity to succeed. They don’t have to be there, after all. Elevated retail prices aren’t to be feared as much as empty airport storefronts.

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  • Epic Editorial FAIL
    I usually agree with you guys, but you missed the mark on this one - badly.

    1. Street pricing was a known part of the lease from the get go. Had things gone above plan and vendors earned more profit than predicted, would they be volunteering a clawback? No way. A deal is a deal. If vendors want out of their deal, then let them forfeit their concession and find a new vendor.

    2. If you do want vendor relief, the easiest way to do it is to cut rents - which as you note are double street rates. If the Airport Authority has bills to pay and its own financial challenges, well, so do the people flying in and out of that airport. Why do governments always turn to soaking the public instead of tightening their belt to solve operating budget problems when times are tough?

    3. Most importantly, let's just cut to the heart of the matter. The Airport Authority rents are based on a percentage of revenue, so if prices go up, the Authority gets more revenue. In other words, this would be a tax increase plain and simple. It's a stealth "bailout" proposal for the Airport Authority.

    4. Once given relief from street pricing, vendors will never go back. This institutes a permanent revenue stream and will let them generate windfall profits on their lucrative, long term, monopoly leases when the economy improves.

    5. Street pricing is one relatively unique selling point of Indianapolis. It is mystifying that the business newspaper would advocate a policy that makes the business climate worse - other than for a handful of lucky concessionaires that is. The city already has nosebleed inducing hotel and rental car taxes. Why add to the burden?

    Again, if you want to give vendors relief, I'm fine with that. Give them temporary rent reductions. If the Airport Authority can't figure out how to make it work with their budget, I'd suggest asking Mitch Daniels to take a week of vacation to come over and show them how it is done.

    You guys need to take a mulligan on this one. FAIL.

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