Sun | Dec 15, 2019

NMIA vendors fear shop rental hike

Published:Wednesday | November 6, 2019 | 12:11 AM

PAC Kingston, the new operator of Norman Manley International Airport, NMIA, is already considering renegotiating contracts with vendors at the airport to ramp up revenue PAC is the subsidiary created by Pacific Airport Group of Mexico to hold the 25-year NMIA concession.

The new operator took full possession of the airport officially last month and already,w some of the local vendors are concerned the retail space there could be repriced beyond their pockets.

“They will end up with just foreign brands at our airport and it will look like any other airport in the USA – not selling Jamaican goods and services,” said one owner of a store, who requested anonymity so as not to colour what the person referred to as potential renegotiations.

“Rent is already prohibitive, and several concessionaires are suffering,” the person added.

Pacific Group operates well over a dozen airports across Mexico and two airports in Jamaica, NMIA and Sangster International in Montego Bay.

The Mexican firm acquired the NMIA concession in October 2018, with a one-year transition period. GAP will incorporate the Jamaican airport into its financials for the first time in its fourth-quarter results.

“The consolidation of Manley during fourth quarter 2019 is based on the current operation of the airport, which could change in the future. Current contracts for services received, as well as commercial contracts, may be renegotiated and bid out to improve the airport’s current financial and operating structure,” said GAP in market filings.

New tariff regime

A new tariff regime is also scheduled for implementation as of January 1, 2020, which GAP says “will allow improvements in operating results and recovery of committed investments with the Government of Jamaica”.

Requests for comment were unanswered by GAP. The Airports Authority of Jamaica redirected queries to the concessionaire.

During the 12-month transitional period, the airport company said it made a payment of US$7.1 million for the assignment of the contract. Under the concession agreement, GAP says it needs to make a US$60-million investment over the first three years to cover mandatory works.

“Additionally, GAP will pay authorities a concession fee of 62 per cent over total aeronautical and commercial revenues; these concepts, as well as operating expenses, are included in the determination of passenger fees,” GAP said.

During 2018, NMIA served 1.7 million passengers.

Up to September of this year, passenger traffic was 1.4 million, representing an increase of 8.4 per cent.