Wednesday, August 17, 2022
4:00 pm to 4:30 pm EDT

Nearly 2-1/2 years into the pandemic, the aviation ecosystem still struggles to recover. As an
industry, we are confronting severe labor shortages, high inflation and economic uncertainty,
supply chain challenges, geopolitical unrest, weather disruptions, and, of course, a persistent and
occasionally resurgent virus. One fact is clear: our industry is not recovered. We all accumulated
much debt over the past two years, and many continue to incur operating losses that simply
prolong the recovery.

Over the past few months, the ARRA Forum has considered our cautious recovery from the
perspectives of airports, large concessionaires, and ACDBE concessionaires. We are now
discussing elements of the business framework underlying the industry, as well as strategies and
solutions to evolve a sustainable, resilient, and agile airport restaurant and retail industry to
enhance the passenger experience.

This month we turn to capital. We invite you to join our August Forum as we welcome Ajay
Thomas, Senior Managing Director and National Head of Public Finance for FHN Financial, an
industry leader in bond market sales, trading, strategies, and investment services. We will talk
with Ajay about the state of the financial markets, potential effects of Federal Reserve policies,
and, critically for our industry, how public finance markets view airports and concessions. No
doubt this will be an informative conversation. We hope you can join us.

ABOUT OUR GUEST

​Ajay Thomas
Senior Managing Director and National Head of Public Finance
FHN Financial
 
Ajay Thomas is Senior Managing Director of FHN Financial (the fixed income division of First Horizon Bank), serves as the firm’s National Head of Public Finance. Since joining FHN Financial in August 2017, Mr. Thomas has built a Public Finance Investment Banking team that is recognized for its rapid growth and success in the municipal securities industry. FHN Financial is now among the leaders in major growth markets across the United States in municipal securities financing. With the recent addition of a transportation sector team with specialists in airport sector financing, FHN Financial has recently been included in financings for JFK International Airport and new capital program financings for Phoenix Sky Harbor, Nashville, and Memphis International Airports.
 
Ajay has 21 years of experience in the municipal securities industry, executing bond-financing transactions across sector disciplines for a variety of municipal issuers, including many of the nation’s airports. He joined FHN Financial from William Blair, where he also served as Head of Public Finance Banking and later in his tenure as Head of the Municipal Securities Group that included management responsibility of Municipal Sales, Trading, and Underwriting. Prior to William Blair, Mr. Thomas worked at Morgan Stanley and Raymond James. In addition to his airport financing work at FHN Financial, Ajay has worked on large, complex financing for George Bush Intercontinental Airport, Austin-Bergstrom, and Dallas-Fort Worth International Airport, among others.
 
Mr. Thomas received his Bachelor of Arts in Economics from Southwestern University, where he was selected as a General Course Scholar to the London School of Economics. He later earned his Master of Public Policy degree from Harvard University and a J.D. from the University of Texas. Mr. Thomas currently serves on Southwestern University’s Board of Visitors and the Harvard Kennedy School’s Advisory Board for the Taubman Center for State & Local Government.

We’re at an “important crossroads.” The airport concessions industry is in a “reset mode.” It’s time for a “collaborative, transparent conversation.” These sentiments ran throughout our July Forum with Riley Lagesen, chair of Greenberg Traurig’s Global Restaurant Industry Group, and Rich Schneider, COO of Areas USA.

Today’s prevalent concessions model is based on the street: we wish to present a street-side experience to our passengers: street brands, street experiences, street prices. The idea is good, but does it work in the distinctly non-street environment of an airport? Especially in our post-Covid economic environment.

​For ARRA’s July Forum, we asked the question: “Streetside-Airside, What’s the Difference?” Riley and Rich answered the top-line question: there are many differences. The differences are stark. And, more ominously, without collaborative action, the differences threaten the future of our industry as we know it today.

Here are three Forum takeaways:

· The big elephant in the room is occupancy costs. Occupancy cost in an airport – especially as a percentage of sales – is generally significantly higher than any place on the street. Absent unusual circumstances, everybody on the street keeps occupancy under 10%. You won’t find that in an airport. Moreover, in the airport, numerous other costs pile on top of rent to greatly increase occupancy cost.

· The brand model is at risk. Both parties – brand and operator – need to succeed for a successful licensing relationship. However, the economics of operating in an airport are pushing operators too hard to have a successful brand relationship. Rents are different, labor is different, capital is different – there’s not much left to pay a royalty and that’s where brands aren’t going to want to do these deals anymore.

· The labor challenge is with us forever – we’re never going to say, “we’re settled.” The industry must adapt to a new labor environment: accepting flexibility in scheduling; making the airport more attractive and easier as a place to work; introducing technology, not as a substitute for labor, but to enhance labor; working together to fix this challenge.

These are just three important topics; there were many more, too many to highlight here. We encourage you to watch the replay to learn more about the challenges airport concessions operators face as they work to enhance the passenger journey.

For its June 2022 Forum, the Airport Restaurant & Retail Association (ARRA) continued its “mini-series” looking at the state of the airport concessions industry two years into the pandemic. We welcomed two veteran ACDBE concessionaires – Bill Swift of Business Traveler Services and Greg Plummer of Concord Collective. They discussed the ACDBE perspective of the impacts of the pandemic, state of the recovery, and future for this important segment of the concessions industry.
 
A principal theme: our industry is not recovered. There remains debt from the past two years to work through, as well as a need to create tools to stabilize the industry and prepare for future disruptions.

​For its May 2022 Forum, the Airport Restaurant & Retail Association (ARRA) welcomed two industry CEOs –Gregg Paradies of Paradies Lagardère and Michael Svagdis of SSP America. They discussed the industry recovery from the pandemic in the face of the new operating challenges of labor shortages, supply chains, and inflation. A common theme: the industry’s recovery is underway but remains a work in progress. Gregg and Michael also noted long-term positive impacts that came out of the pandemic: there is a greater degree of collaboration between airports and concessionaires, as well as a greater focus on the customer experience.

At its April 2022 Forum, the Airport Restaurant & Retail Association (ARRA) welcomed Matt Cornelius and Annie Russo of Airports Council International - North America to discuss how airports are faring in their recovery at the two-year mark of the pandemic. Matt and Annie discussed financial recovery, labor shortages, restoring full operations, and federal legislative priorities. Here are three takeaways: