Lower prices for coffee and snacks for people awaiting their flights at Ben-Gurion International Airport are going to have to wait, it seems, now that the Israel Airports Authority has quietly canceled bidding to operate two coffee stations at the airport’s main terminal.
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The tender was supposed to bring lower prices for tired travelers by lowering the fee operators pay for the two stations by more than half, to 5 million shekels ($1.4 million) annually. In addition, the IAA had set top prices for four basic menu items and said it would award higher scores for bids that promised even lower ones.
But the authority quietly announced on the eve of the Passover holiday that the tender had been canceled, the three bidders said on Tuesday. The IAA says the tender wasn’t canceled, but contained erroneous terms requiring it to be withdrawn. It will be published again soon, officials said.
Either way, it means that the current franchisee, the Café Joe chain, will be staying on past the April 30 deadline for its current contract to run out and will be charging prices based on the 10.5 million shekel operator’s fee it pays every year.
In any case, the IAA’s move represents another setback to lower the exorbitant food prices travelers pay at Ben-Gurion – a stunning contrast to plunging airfares since the Open Skies accord with the European Union went into effect in 2013.
Meanwhile, efforts to restructure the contract for operating the taxi franchise at Ben-Gurion, aimed at lowering fares, has also been enmeshed in accusations that the IAA is doing little to lower the fat fees it charges, which are passed on to riders.
People in the restaurant industry say the authority is exploiting its monopoly over the millions of travelers who pass through Israel’s main international terminal.
“The IAA operates a shopping mall with the highest fees per square meter anywhere in the country without having the foggiest idea about how to properly manage the Ben-Gurion mall,” said a source in the restaurant industry.
In fact, the fees are so high, there is little interest in the franchises to begin with, despite the huge guaranteed traffic. Arcaffe, which ran the two stations together with the ground services company QAS, gave up the rights because they found the operations unprofitable due to the high costs.
Café Joe took over the franchise in 2015.
Café Joe, which counts 250 cafes and other points of sale around the country, put in a bid for the new contract, which runs for seven years and eight months, originally starting May 1. The other two bidders were the Strauss Group, which planned to operate them under the Elite Coffee name, and an unnamed foreign company.
Most café operators declined to submit bids at all, citing the poor terms, even after the IAA cut the basic fee by half. Operating restaurants and cafes at Ben-Gurion entails huge costs above and beyond the basic fee.
Employees have to pass rigorous security clearances, the stands have to be run 24 hours a day, seven days a week, including Shabbat and holidays, when labor costs are higher by law.
Others complained that even the basic prices demanded by the IAA are too low – espresso for a top price of seven shekels (just under $2), a small cappuccino for 10, a small bottle of mineral water for seven and a croissant for 10. Operators can only make profits if they overcharge for unsupervised menu items.
“No one can survive there over time, even big franchises like [the duty-free chain] James Richardson wanted out,” said one source, who asked not to be named. “The price of coffee may go down but sandwiches will have to be higher.”