Jacksonville International Airport's split is 70 percent nonaeronautical revenue, which brought in $52 million in 2015, driven by parking, rental car and concessions, he said. This document addresses common issues that have arisen or may arise for airport sponsors during the response to the COVID-19 public health emergency. These benefit packages may make the cost of employment significantly higher than the all-in employment costs for most concession operators. By using this site you agree to our use of cookies. Airlines are likely to oppose any PFC increase, and in the absence of any increase, infrastructure spending would likely be funded through additional appropriations to the Airport and Airway Trust Fund. Given that we are considering a new paradigm, airports and concessionaires may wish to consider three other business structure options. https://www.law.cornell.edu/cfr/text/49/part-23, Airport Concessions Disadvantaged Business Enterprises, Developing An Operating Budget - Airport University, Disadvantaged Business Enterprises - Airport University. Bond Covenants and Indenture Pledge of Revenues. Percentage Rent - In addition to the MAG, Concessionaires shall pay percentage rent but only to the extent that percentage rent exceeds the monthly installment of MAG, In a standard MAG model, the concessionaire bears a great deal of uncertainty with little risk falling to the airport. First championed by Martin Moodieone of the stalwarts of the concession industrythis model has airports, retailers, and suppliers cooperate in developing concession operations. These three options do not change the underlying airport-concessionaire relationship. Match. A prepaid monthly "lease" to do business on the property. The airport environment is complex and has become even more challenging due to COVID-19. Minimum Annual Guarantee Definition | Law Insider PDF Request for Proposal - Dallas/Fort Worth International Airport With a MAG based on enplanements, the airport accepts the risk of failing to deliver enough enplanements. If an airport can become a partner in the operation of a concession, it might also consider being a concession operator on its own. If the metric for rent resumption is comparing the current period to the same period in the previous year, by the time the world reaches year two of recoveryeven if the improvement is only slight and slowthe contract may reinstate the original MAG. To level the playing field so that DBEs can compete . Here are some others. It was suspended in June, following the severe decline of passenger traffic over those . The repayment will occur over time, with 50% of the deferral being due by Dec. 31, 3021, and the remaining due by Dec. 31, 2022. The 10-year contract was awarded on the basis of the minimum annual guarantee payment totaling $352,000 or a percentage of gross receipts, whichever is greater. Minimum Annual Guarantee. In the event that the concessionaire is unsuccessful, the airport absorbs the losses. Hence, a fairer methodology for establishing a MAG is to base it on an absolute value per exposed passenger. Find more information in a tax alert comparing COVID-19 employer tax incentives, issued by our National Tax Office. In addition to the detailed guidance in the Revenue Use Policy, the CARES Act makes clear that the funds may not be used for any purpose unrelated to the airport.
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