Which concession lease approach poses the greatest risk for the airport?

The traditional lease approach poses the greatest risk for the airport primarily because it usually involves a fixed rental amount paid by the concessionaire regardless of the revenue generated. This structure can lead to financial strain for the airport if the concessionaire struggles to attract customers or maintain efficient operations, resulting in lower sales. Unlike other lease structures that adapt to performance – such as revenue-sharing or percentage leases, which can provide the airport with a variable revenue stream based on concessions performance – the traditional lease does not offer such flexibility.

Therefore, in scenarios where overall airport traffic is down or specific concessions fail to perform well, the airport continues to receive the same fixed lease payments, potentially leading to a misalignment of interests between the airport and the concessionaire. This rigid structure increases the airport's exposure to financial risk and may limit its long-term revenue potential compared to more adaptable leasing options.