HAGÅTÑA (The Guam Daily Post) — The Guam International Airport Authority may soon be able to renegotiate and extend all existing deals with its concession providers for another three years instead of having to put them out to bid again.
That includes a $154 million deal with luxury vendor Lotte Duty Free, which is set to expire July 20. The Lotte contract is the subject of a longstanding court battle with former airport luxury concessionaire DFS, which alleged misconduct after the Lotte award in 2012.
Lawmakers Monday voted to pass Bill 130-37, which would authorize the renegotiations. It will now head to Gov. Lou Leon Guerrero’s desk for approval or rejection.
But the measure, touted as a way to help keep afloat airport vendors who struggled through the COVID-19 pandemic, was not without its objections.
Sen. Joe San Agustin, main sponsor of the bill, pointed to the significant revenue losses the airport faced through the disasters.
“This bill provides a revenue stream for our airport to operate efficiently and ensure financial security,” he said.
Fees collected from concession providers make up nearly a third of the airport’s revenue.
Sen. Jesse Lujan, a co-sponsor of the bill, added that bad market conditions made the prospect of getting new concessionaires bleak, and said the lack of long-term deals would prevent current vendors from investing in the airport.
“While these concessions may continue on a month-to-month basis, … they must also recover and cannot be expected to make the necessary improvements,” Lujan told his colleagues.
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But Speaker Therese Terlaje took issue with senators authorizing the extension of contracts without looking at the lease terms.
“It’s another one of those cases where they just want the authority to renegotiate a lease, and they want us to wash our hands of it and say, ‘Do whatever you want, even if you lose money for the government of Guam,’” Terlaje said.
She said she was also concerned that airport management during a hearing for the bill said they were “unsure” they could even put concessions contracts out to bid again due to ongoing litigation.
Both Lotte and GIAA have been sued by DFS, though that specific lawsuit was not actually named by airport management during a recent public hearing. Lotte officials were the only vendors who showed up to testify in person for Bill 130-37, and Lotte consultant Tony Sgro said Lotte had covered $20 million worth of legal fees for the airport.
Terlaje on Monday said management had told the Legislature that most concessions vendors were operating on a month-to-month basis since before the pandemic. Airport management had never before asked for the authority lawmakers were granting.
“I’m not sure, to be honest with you, if we are interfering with that litigation,” she said. “And that’s why I’m really very cautious.”
Sen. Chris Duenas countered that GIAA had not made the decision lightly, and that the issues being faced by vendors post-pandemic were widespread.
Businesses operating at the A.B. Won Pat International Airport had faced particular hardship, Duenas said.
“Did any one of us, when the limited restaurants could open, run up and eat Burger King at the airport? Did any one of us go (and) buy luxury goods at the airport? No, because it’s an airport,” he said.
“I’m almost lost for words,” San Agustin said. “Everybody wants to talk about everything under the sky. This bill (is) very simple – authorize the extension of concessions.”
Sens. Frank Blas Jr., Duenas, Tom Fisher, Lujan, Will Parkinson, Roy Quinata, San Agustin, Dwayne San Nicolas and Telo Taitague and Vice Speaker Tina Muña Barnes voted in favor of Bill 130.
Sens. Chris Barnett and Joanne Brown and Speaker Terlaje voted against it. Sens. Sabina Perez and Amanda Shelton were absent and excused.
A Jeju Air plane taxis to a jetway after landing April 3, 2023, at the A.B. Won Pat International Airport in Tiyan.
