City committee approves changes to LAX concession contracts, lifts most 18% price cap

A Los Angeles City trade committee voted to approve a Board of Airport Commissioners report tied to board resolution 28084 that amends in-terminal concession agreements at Los Angeles International Airport and adopts standard operating procedures, including a categorical CEQA exemption.

The action, approved on a 2-0 voice roll call with Councilmember Rodriguez absent, removes most of the long-standing 18% "above street" price cap for airport concessionaires and places a new set of standard operating procedures (SOPs) under Los Angeles World Airports (LAWA) administration so the executive director can make routine pricing and operational changes without returning each time to the board and City Council.

The committee said the change is intended to help concessionaires — particularly participants in the airport's Airport Concessions Disadvantaged Business Enterprise (ACDBE) program — cope with sharply reduced passenger traffic and rising operating costs since the pandemic. Denise Sample, a LAWA representative, told the committee the amendments are a "first step" and that LAWA met with ACDBEs to craft measures that would allow relief within the limits of existing contracts.

"What this does is it allows us to, most importantly, relieve them of the 18% above street price cap that we have had, which was set back in 2012," Sample said. "And, allows them to set prices at any cost that they would like, except for water, baby products, feminine products, and over the counter medicines. Those will remain at 18% above street because we know that those are things that everybody needs." Sample said LAWA will continue audits and regular reporting on concessionaire performance and can provide additional interventions on a case-by-case "distressed concessionaire" basis.

Councilmember Park, who moved approval, described the change as a difficult but necessary step and asked LAWA to provide ongoing economic tracking. "I hate that we're even having to have the discussion about raising the cap," Park said, adding that the committee should be kept apprised of whether the intervention stabilizes businesses.

Councilmember McOsker asked for clarity on how SOP changes will be managed going forward; LAWA staff said that by adopting the SOPs now, routine adjustments could be made by CEO authority and that contract-term or revenue-affecting changes (for example, changes to minimum annual guarantees) would still require board and City Council approval. "So by you approving this today, it puts the first step of us having the standard operating procedures approved by both the board and the city council. Going forward, changes to them can be made by CEO authority," LAWA staff explained.

The committee discussion noted several specific provisions included in the SOPs and the report: the 18% cap remains in place for a defined "market basket" of essentials (water, baby products, feminine products and OTC medicines); LAWA will maintain an annual (and, if directed, more frequent) price-review and reporting process; and a distressed concessionaire program will allow LAWA to consider individualized relief such as adjusted minimums or payment plans.

LAWA officials also described operational flexibility on hours of operation where passenger volumes remain low, citing examples such as Terminal 1 where Southwest Airlines traffic reportedly remains down about 70%. LAWA said it would work with concessionaires and airlines to structure staffing and hours consistent with collective bargaining requirements while limiting unnecessary costs.

Public commenters raised a range of unrelated concerns during the meeting's public comment period, including allegations of human trafficking connected to religious organizations, calls to sell LAX to address budget shortfalls, parking enforcement complaints, and criticism of the city's fire response. Those public remarks were heard but did not change the committee's action on item 1.

The committee approved the item on a 2-0 vote and adopted the recommended SOPs and CEQA categorical exemption as described in the Board of Airport Commissioners report.

The committee recorded that it would continue to monitor concession performance and that LAWA would provide reports and audits as the new SOPs take effect.