DFS sees relief in progress of bills

By Gordon Y.K. Pang
Advertiser Capitol Bureau

Retailer DFS Hawai'i went 2-for-2 at the Legislature yesterday.

The House Transportation Committee deferred a bill that would allow state contracts for multiple duty-free concessions at airports, ending DFS' monopoly.

And the Senate Transportation Committee advanced a bill that would relieve DFS and other airport concessionaires from paying minimum rents until they recover from recent economic setbacks.

DFS has fallen on hard times since the terrorist attacks of Sept. 11, 2001, with revenues declining by about a third. The company is currently about $45 million behind in rent payments to the state.

Glenn Okimoto, acting deputy director of the Department of Transportation, told the House Transportation Committee the current law "has severely limited the number of bidders for this concession, as evidenced by the fact that only one bid has been received for each of the last three leases that have been offered for bid since 1990."

Passage of the bill could allow the department to select separate vendors for each airport, or choose different vendors for airport and non-airport duty-free operations, Okimoto said.

Sharon Weiner, DFS group vice president, said state transportation officials had awarded two duty-free concessions in 1980, only to realize later it was a mistake that was costing the state. "With two operators, the expenses of business double," she said. "Twice as much office expense, twice as much accounting, buying and computer expenses."

House Transportation Chairman Joe Souki said after the meeting he did not think the bill would solve the state's problems with airport concessions, noting that the looming prospect of war with Iraq could make it difficult to attract bidders.

A similar bill failed to make it out of committee in 2001.

At the Senate Transportation Committee hearing, members voted unanimously to move a bill that allows about a dozen qualifying airport concessionaires to waive their minimum lease amounts and then negotiate a temporary reduced rent with the state based on a percentage of sales.

The bill passed the Legislature last year, but was vetoed by Gov. Ben Cayetano, who said it would give retailers too much state support.

In October 2001, the Legislature authorized temporary relief for the concessionaires, and the Transportation Department granted rental waivers and other measures that saved airport businesses more than $26 million. Those waivers expired after April 2002.

New transportation director Rod Haraga said the Lingle administration had not decided yet whether to support the bill.

"It's important, because we need to try to help the concessionaires who have done business with us for many years," said Transportation Chairman Cal Kawamoto after the meeting.

Reach Gordon Y.K. Pang at gpang@honoluluadvertiser.com or 525-8070.