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CPA signs concession pact with LSG
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Posted on Feb 20 2005
The Commonwealth Ports Authority approved on Friday an agreement granting LSG Lufthansa Service Saipan Inc. a non-exclusive right to operate a food and beverage concession at the Saipan International Airport.
Unlike CPA’s previous contract with DFS Saipan Limited, the new agreement with LSG gives the ports authority a greater role in the operation of the concession, including areas relating to the type of food and beverage served and the physical appearance of the restaurant.
“This new provision addresses an ongoing issue we have with LSG when we see need for certain kinds of services to be provided at the concession. In the past, we had only a suggesting role; the new agreement gives CPA more role in deciding the makeup of concessions at the airport,” said CPA executive director Carlos Salas.
Since July 1995, LSG has operated a restaurant at the airport under a sub-concession agreement with DFS, which used to hold the exclusive right to prepare, serve, and sell food and beverage items at the Saipan airport.
But CPA terminated LSG’s sub-concession on March 29, 2004 due to the company’s failure to comply with the terms of the sub-concession agreement.
Under the old contract, LSG was obligated “to establish a full service restaurant, snack bar and mobile cart-type outlets…and to further establish such food and beverage services at a standard comparable to other international airports in the region.”
“LSG has had nearly eight years to fulfill its obligations under the sub-concession agreement and the members of this board, through personal observation and comments from travelers, citizens, and leaders of the Commonwealth, finds that LSG has failed to perform its obligations under the sub-concession agreement,” the CPA board of directors had said.
CPA, however, decided to re-hire LSG after DFS gave its exclusive concession rights at the airport back to the ports authority.
The new contract allows LSG to establish a restaurant, snack bar, and other outlets. But this right does not prevent DFS from selling prepackaged snack and gift food items, as well as beverage items for consumption of DFS’ concession premises.
