Business inside airport drops by 35%

Reeling Under Shortage Of Passenger Traffic, Food Outlets At City Airport Want Their Monthly Rents To Be Reduced

V Ayyappan | TNN 

Oct 18, 2008

Chennai: If flights are hit by shortage of passengers, can the food outlets and restaurants at the airport be far behind? Several popular restaurant chains, which had opened outlets at the city airport to cash in on the booming aviation industry, have been dealt a severe blow by the fall in passeng

er traffic. And with flying once again becoming expensive, the passengers who continue to fly avoid spending money on eatables at the airport. 

    Even though this is peak season in the life of an airport, when maximum number of passengers should be flying out and flying in, the number of passengers and the number of aircraft have come down because of the oil-pricetriggered slowdown in aviation. “The business is worse than it used to be in June, July and August, which is off season. The restaurants should be crowded in the morning but now we have just three to four passengers dropping in for breakfast. This has never happened in the past,” said Parminder Singh, who runs the Golden Chariot restaurant at the airport. Almost all licencees who have rented space at the Chennai airport said their revenue has dropped by 35-40 %.

    “This is a severe blow to the units because we have to spend on paying salaries, water and electricity in addition to the hefty monthly rent. The revenue no longer match the expenditure,” Singh said. The nearly 100 licensees who have rented space in the domestic and international terminals pay Rs 5 lakh to Rs 1 crore as monthly rent to the Airports Authority of India. They have now asked AAI to either reduce the monthly rent or scrap clause for 10% annual increase in the rent. “The rent is fixed depending on the location of a shop. It is naturally high for spots that are accessed by more passengers. Most traders signed the contract in the hope that they would be generating huge revenues because of the projected boom in aviation,” said a licensee. 

    The outlet of Sangeetha, a highly popular chain of vegetarian restaurants in Chennai, was doing equally well at the airport also. But it is now facing a tough time due to the drop in the number of passengers. “We are using up 60% of our sparse revenue to pay the monthly rent. The unit is suffering a monthly loss of about Rs 5 lakh,” R Babu, proprietor of the restaurant. 

    The airport, however, is insulated from the slowdown because the Airports Authority of India had enough foresight to put a clause in the contract that ensured that the licensees paid the monthly rent irrespective of the fluctuations in revenue. The airport rakes in Rs 137 crore a year from rent. 

    A senior official of AAI said it was highly unlikely that the rents would be revised because similar demands were raised when airports faced a dip in passenger traffic twice before — during the Gulf War and post- 9/11.