Helping Small Airport Businesses Survive the Pandemic

COVID-19 has decimated the airport concessions industry. In January of this year, travel statistics pointed to record-breaking high volumes; by the end of March, traffic had slowed to an almost stand-still. TSA screenings represented only 3% of the prior years’ numbers, and aviation restaurants and retail outlets saw business drop in corresponding numbers. Airport concessionaires were forced to furlough employees and negotiate with distributors about payment terms.

With air traffic down over 90% and COVID-19 concerns expected to extend through year end, businesses will continue to suffer, including those businesses that create jobs. One of the heaviest tolls will be on airport minority- and female-owned businesses, known by the acronym ACDBE — airport concession disadvantaged business enterprises. These are the small businesses operating in airports around the country. Airport businesses are unique and this industry requires special considerations for survival and sustainability.

Women and people of color already face substantial hurdles as they start and grow businesses, including access to capital and other disparities that do not in any way reflect the inherent entrepreneurial abilities of these groups. While the COVID-19 small business crisis has inspired a massive policy response, ACDBE airport businesses are especially hard hit, and the historic policy response is not enough to resuscitate many of them.

PPP loans are welcomed, if they can be secured, but 8 weeks of payroll protection is not sufficient. Payroll and rents represent a business’s largest expense, but airport rents and operating costs are significantly higher than those in other industries. Further, many airports have yet to release relief plans, so costs continue to amass. The most egregious threat is that repayment of rents will be nearly impossible as airport traffic will be slow to ramp up, thus never delivering sufficient cashflow to cover back rent. Recovery is nearly impossible. I want to see airport small business not only survive, but thrive; this cannot happen without special understanding and consideration of these unique airport businesses.

Relief efforts tailored not only for short-term survival, but for long-term profitability and sustainability, are essential. Lease extensions are one way to alleviate the back-rent problem, but they will not solve the overall issue. Rent waivers, not deferrals, would allow small airport businesses to rebuild cash reserves and generate capital to carry businesses until passenger traffic fully recovers. This would keep the debt burden from shutting down vulnerable businesses down permanently.

One overriding concern, when the recovery does come, and it will, is that many small businesses will simply no longer exist. Importantly, these small businesses supply many of the workers who are needed in airports today and in the future: restaurant waiters, cooks, dishwashers, cleaning crews; retail workers; transportation employees and other individuals without whom airports cannot operate. This pandemic is devastating to small businesses, indeed, but especially so to the minority- and women- owned airport retail and restaurant businesses which neither enjoy the same access to capital nor encompass the same business model fundamentals to weather such events.