Airport Experience® News - Post-Conference Issue 2024

WARD: When we met last year, one of the biggest points of discussion was labor challenges, in terms of both a limited labor pool and the rising costs of labor. Can you update me on the latest key issues surrounding labor? BERNAL: During Covid and coming out of Covid, recruiting and staffing and getting [concessions locations] open was significantly challenging, and that created some wage pressures. On the staffing and recruiting side, I think it’s getting a little easier. Now our challenge is affordability. The union component and how expensive labor has gotten with living wage ordinances – these are really making it tough for us to be able to afford to be in the game. I’ve never seen anything quite like it – the demands that are being placed in our companies to provide these wages and benefits and everything else … without any modification or changes to the existing contracts. We’re being uber cautious as we’re looking at opportunities. It’s got to make financial sense for us. If [airports] want labor peace – if they want certain wages and they want certain benefits – they really have to adjust the business model to allow us to compete and do business in these cities. PARADIES: Labor costs have gone up significantly. For the first time – and I’ve been with the company 36 years – we exercised an option and, once a new labor agreement got pushed upon us, we rescinded the option. We did the math and it didn’t work. Maybe in 2019 we would have done something differently, but today we don’t need to have loss-leading operations. I think we’re all being more disciplined as to how we approach matters. If we can’t operate our brand as we need to, we’re not going to be in that market.

Above: Carlos Bernal of Areas USA said his company is being “uber cautious” when assessing new opportunities due to the escalating cost of operating in airports.

“I think we’re all being more disciplined as to how we approach matters. If we can’t operate our brand as we need to, we’re not going to be that market.” – Gregg Paradies, Paradies Lagardère Our average participation rate on union health care is about 42% – that percentage of employees would take the benefits. My question to unions is where does the rest of the money go? We’re paying for benefits that SVAGDIS: I think the airport administration, the city council, the mayor’s office, all need to become better educated on the unions. I understand the push for wages to a certain extent, but I scratch my head when I look at things that the unions are asking for. They want health care benefits, which we offer the same that I get as the CEO of a company. They want us to cover 100% of the cost, which I pay out of pocket. But they also want us to give it to every employee, every union employee, even if the employee doesn’t take it.

Above: Union challenges were top of mind for most CEOs, including SSP America’s Michael Svagdis, who outlined myriad demands from union officials that weigh heavily on the operators’ ability to be profitable.

employees aren’t taking. The money goes to the unions. They want us to contribute to their pension plans but we have 401K that’s just as good as the pension plan…. If I’m an employee on a union pension plan, and I leave before five years or ten years, I get zero from the pension plan. Where does that money go? With us, if they leave within a year, they take their money and they take the match. The next thing is, if we keep raising the hourly team members wages, we get a compression. Now they’re getting paid as much as our supervisors and close to our managers’ pay level. We have to give them increases to create a proper gap. It’s just one thing after another. They want us to pay for legal funds for employees. Then there’s a training fund but I’m not seeing the training being done. All these things other than wages are just piling up one after another, and it’s very, very difficult to run a business and be profitable.

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AX NEWS APRIL/MAY 2024