Audit of airport concessionaires shows some gouge passengers, but don’t cheat city

By David Pendered

Prices for some food items at Atlanta’s airport are marked up as much as 67 percent higher than their local value, which is in violation of the vendors’ contracts with the airport, an audit by Atlanta’s auditor has determined.

Some airport concessionaires price gouge passengers, an Atlanta audit determined. File/Credit: David Pendered

This was one finding in an audit conducted to discover if vendors are paying the city all the rent that they owe. The audit determined that vendors are paying almost the appropriate amounts. The rate of underpayments was 0.2 percent. The rate of overpayments was 0.2 percent, according to the audit.

But it was the issue of price-gouging that caught the attention of auditors. City officials maintain that the airport will be managed so that it is customer friendly – a key factor in the competitive world of commercial aviation.

Concessionaires agree to mark up items no more than 10 percent above their price at the concessionaires’ other establishments, or above their local value, according to the audit.

The steepest price hike was 67 percent, for edamame. The local price for a similar serving is $2.99. The price at an unidentified business at the airport was $4.99, according to the audit.

Restaurants at Atlanta’s airport are allowed to charge up to 10 percent more for items than their price at sites other than the airport. Some items are priced at 50 percent or more than their cost away from the airport, an Atlanta audit showed. Credit: Atlanta audit

The next highest price hike was for an eight-piece serving of spicy tuna role. The local price is $6.99 and the price at an airport establishment was $10.99 – a hike of 57 percent.

There was a tie for third highest price hike, at 50 percent. Pork egg rolls that go for $3.79 outside the airport go for $5.69 at the airport. Two spring rolls that cost $3.79 away from the airport go for $569 at the airport, the audit determined.

These findings are included in a performance audit of Atlanta’s Department of Aviation Concessions Management Unit. The audit was conducted by the office of Leslie Ward, Atlanta’s auditor. Ward delivered the audit Aug. 24 to the Atlanta City Council’s Transportation Committee and Nia Young, senior performance auditor, made the presentation.

Young said the airport has contracted with a third party to monitor pricing. As the audit states:

• “A contract with Evaluation System for Personnel, Inc. (ESP) has now been executed and the company will conduct 200-300 Mystery Shops and one to 25 Market Basket evaluations per month.”

Interim airport General Manager Roosevelt Council Jr. responded to the committee the airport doesn’t have adequate staff to monitor each of the 125 concessions on a regular basis. That’s what it would take to ensure that passengers are not charged more than the amount vendors agreed to charge.

Passengers are increasing their spending on food and drink at a faster pace than for other items. Credit: Atlanta audit

“One of biggest challenges is trying to make sure people are not overpricing,” Roosevelt told the committee. “Sometimes concessionaires get creative.”

Roosevelt said the airport has relied on competition among vendors to keep prices in line. If one vendor is overcharging, his competitors typically notify airport officials.

“They self-police each other,” he said. “That culture has worked quite well for us.”

The price gouging was discovered in the course of an audit that had a different purpose.

Revenues from concessions have increased by two-thirds from 2007 through 2015. The Maynard Jackson International Terminal opened in May 2012. Credit: Atlanta audit

The audit was conducted because, “terminal concessions are a significant source of airport revenue, and the department relies on concessionaires’ self-reported gross receipts to calculate amounts due for rent, which carries inherent risk,” the audit states.

To that end, the audit determined that payments are within 0.2 percent of the amount owed. Overpayments are at 0.2 percent and underpayments are at 0.2 percent. Young said most of the figures are from 2015 because that is the most recent year that a full data set was available.

“Congrats to the airport,” committee chairperson Yolanda Adrian said at the conclusion of Young’s presentation.