Sales sill stagnant at airport outlets

V Ayyappan TNN

Feb 26, 2009

Chennai: Domestic passenger traffic may be improving since November, but restaurants and shops at the Chennai airport are yet to see any increase in revenues. Since their business is down by as much as 30% since last April, the Airports Authority of India (AAI) has decided to lend a helping hand by relaxing the rules in the contract. Following representations from service providers inside passenger terminals, AAI has allowed them the flexibility of paying the monthly license fee in six equal monthly instalments. And an exit clause has also been weaved into the contract so that agencies that are incurring losses can shut shop without being blacklisted. “As most of the service providers like restaurants, car parks, and bookshops started to default in payment of license fee due to loss of revenue, we have decided to allow them to clear the dues in instalments. Besides, we have also allowed the agencies to quit by submitting three month’s notice,” said a senior AAI official. Earlier, an agency could leave only after completing 50% of the contract period after submitting a six months’ prior notice. Now they can quit anytime by submitting a three month’s notice. Two agencies have already availed of the exit clause and withdrawn from the airport — Navbharat, which had taken the contract to manage car parking at cargo complex, and another agency that was handling abandoned luggage at the domestic terminal. Sources said that Navbharat had got their contract for the car park extended a couple of months ago. But the agency decided to opt out because of a severe dip in revenue because of decrease in cargo movement. The monthly license fee paid by each of these agencies differed according to the space they occupied and also on the services they offered to the passengers at the airport. The monthly license fee for car parking is approximately Rs 1 crore while for restaurants, the fee varies from Rs 5 lakh to Rs 14 lakh. Sources said that agencies no longer look at terminal space as lucrative for business. Many of the agencies hesitate to bid for space inside smaller airports, especially the ones in Trichy, Madurai and Coimbatore. When passenger flow dipped last April, as many as 100 licensees who have rented space in the domestic and international terminals had requested the AAI to reduce the license fee, but AAI refused. Now, restaurants which have bar licences are under more pressure because the state government recently hiked the annual bar license fee from Rs 1 lakh to Rs 5 lakh. “This has dealt a double blow to restaurants that are already finding it difficult to get customers,” said Parminder Singh, who runs the Golden Chariot restaurant at the airport.