Cincinnati waives MAGs to offset Delta slump

Tina Milton

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Retailers at Cincinnati/North Kentucky International airport are to be given rent relief during 2006 to offset losses arising from cutbacks by Delta Air Lines

Cincinnati/North Kentucky International airport is to waive minimum annual guarantee payments from retailers during 2006 to help them through the slump caused by Delta Air Lines' route cutbacks. Retail sales have been hit hardest at Cincinnati's concourse B, where sales have fallen by 35% compared with 2005. Since December Delta has reduced its flight schedule by 26% across the airport's three concourses.

Retailers will still be required to pay a percentage of sales in 2006 and the airport will re-assess arrangements for 2007. Cincinnati/North Kentucky retail manager commercial and business development David Kellerman nonetheless described 2005 as a "great year", reporting that retail sales were up by 9.2% compared with 2004.

"We knew that retail sales in 2006 would be down substantially on the previous year but had a plan in our back pocket even before the Delta flight reductions were announced," said Kellerman. "We recognise the difficulties that our retail partners are faced with and that's why we have dropped the minimum guarantees, as we knew that tenants would struggle to afford them. Each airport department will work within a financial framework of reduced revenues and it's a year we will have to take in our stride."

The airport is set to open five new stores on concourse C in May as part of an expansion plan agreed in 2005. The area will include a CNBC news store, a Borders bookshop, a Brooks Brothers clothing shop, a toy shop by Kids Works and a Vera Bradley outlet offering handbags and luggage.

HMSHost runs duty-free and duty-paid retail at the airport under a contract expiring in 2009.