Union secured updated federal guidance to ensure that funds set aside for small concessionaires at 6 airports, benefit small businesses and not large corporations
LOS ANGELES & PHOENIX–(BUSINESS WIRE)–UNITE HERE Local 11 sent a letter to the Federal Aviation Administration on October 22, 2021 calling for the agency to ensure that federal pandemic relief funds are distributed appropriately in the six southwestern airports where Local 11 represents concessions workers. On November 24, 2021, the FAA issued updated guidance and subsequently responded to Local 11, clarifying ways to ensure that ARPA Airport Rescue Grant money will be routed fairly to concessionaires in its jurisdiction. Full guidance available here.
UNITE HERE Local 11 represents airport concessions workers at Los Angeles International Airport (LAX), Phoenix Sky Harbor Airport (PHX), John Wayne Airport (SNA), Ontario International Airport (ONT), Long Beach Airport (LGB), and Tucson Airport (TUS). In total, the union represents more than 32,000 hospitality workers in Southern California and Arizona.
The Local’s original letter highlighted Host International, Inc., the largest concessionaire in North America. HMS Host is owned by Italian billionaires through the holding company, Edizione, which had a net asset value of $12.5 billion in 2020.
In addition to sending the letter to the FAA, the Local met with Congressman Greg Stanton, who serves on the Transportation Committee in Congress, to whom HMS Host workers voiced their concern. They feared that if the issue was not addressed, large firms like HMS Host would have been categorized by certain airport sponsors as an eligible small airport concession, giving large airport concessions access to funds from the $640 million small concessionaire allocation.
The FAA responded and closed the loophole that could have allowed large concessionaires such as HMS Host to be categorized differently. The FAA’s updated guidance states that, “A concession that operates locations at several airports should use the entity’s total gross receipts rather than gross receipts for an individual location.”1 This means that national players like Host cannot just reference gross receipts at one particular airport.
In addition, the FAA was firm that an airport sponsor should categorize airport concessions based on the contractual relationship in place as of March 11, 2021, which is the date of enactment of ARPA. The updated FAA guidance states that, “Although there is no prohibition against modifying the contractual relationship between an airport and its concessions, changes made after enactment should not be for the purpose of re-categorizing a concession as either a large or small airport concession (for example, assignment of a sub-concession contract with a prime/developer to be a direct concession contract with the airport sponsor).”2
The Local’s October letter cited our observations at two airports including at Clinton National Airport, where the Little Rock Municipal Airport Commission voted at its August 17, 2021 meeting to reassign the food and beverage concession contract from Host International to a preexisting legal entity, Host JQE RSI LIT FB, LLC. 3 This joint venture includes Host International (70% stake), JQE Enterprises (15% stake), and RSI Group, LLC (15% stake). In the absence of this updated guidance from the FAA, Local 11 argued that this Host-controlled joint venture could have been categorized as a small airport concession for the purposes of subsidy allocations.
UNITE HERE Local 11 is a labor union representing over 32,000 hospitality workers in Southern California and Arizona that work in hotels, restaurants, universities, convention centers, and airports.
1 Please see Q-CR3. Guidance retrievable here: https://www.faa.gov/airports/airport_rescue_grants/media/20211124_ARPA_FAQs.pdf
2 Please see Q-CR26. Guidance retrievable here: https://www.faa.gov/airports/airport_rescue_grants/media/20211124_ARPA_FAQs.pdf
3 (pdf pg. 4) https://drive.google.com/file/d/1ZkpLjcUC9l3CpxQKxIgfBzHYpc11wHUd/view?usp=sharing ; (pdf pg. 223) https://www.autogrill.com/sites/autogrill14corp/files/uk_autogrill_-_conso_2020.pdf