Report Title:

Airport Concessionaires; Contracts; Force Majeure Terms


Requires public contracts for the operation of concessions at airports in the State to contain force majeure terms to absolve the parties of liability for failure to perform due to outside forces.


S.B. NO.









relating to airport concessionaires.



SECTION 1. The legislature finds that various airport concession businesses suffered severe economic losses due to the events of September 11, 2001. Gross receipts for various concessions suddenly dropped by more than thirty per cent for some concessions. New security measures following these events required customers to have a plane ticket before they could shop or eat at most concessions. Many concessions are still suffering and have still not recovered from the events of September 11, 2001. Such concessions under the terms of their present contracts may lose their performance bonds and be barred from doing business with the State for five years. Such punishment is not fair or reasonable to such concessions.

To provide relief for these concessions, the legislature was informed by the department of the attorney general that legislative action was required. Apparently, the terms of the concession leases were so restrictive that no relief could be negotiated between the department of transportation and the lessees of concessions that qualified for relief. Action providing temporary relief was required by the legislature by way of a special legislative session. Such relief should be determined and provided by other means and legislative action should not be required for future events unless absolutely necessary.

The legislature further finds that the leases of such airport concessions were restrictive due in part to the failure of the legislature to provide a relief mechanism for events such as the September 11, 2001, terrorist attacks. Concessionaires have repeatedly complained to the department of transportation about such restrictive contract terms, without success. It is typically this type of restrictive business lease terms by state government that support the repeated charges by Forbes magazine and others that Hawaii is one of the worst states in which to do business. Hawaii’s state government must step forward and do its part to improve this image.

The purpose of this Act is to provide relief to concessionaires and to require that the department of transportation be fair and businesslike in its dealings with airport concessions that now more than ever are susceptible to sudden business downturns over which they have no control. Such businesses generally only have a five-year contract and should not be punished for terrorist or other unexpected events beyond their control. They should be provided fair and adequate relief so that they may survive such unexpected events and continue to serve the tourist and business travelers who are so important to Hawaii’s economy.

SECTION 2. Chapter 102, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§102- Public airport concession contracts; force majeure terms. (a) All public airport concession contracts shall contain force majeure terms that provide that neither party to the contract shall be liable to the other for any failure, delay, or interruption in the performance of any of the terms, covenants, or conditions of the contract due to causes beyond the control of that party, including, without limitation, strikes, boycotts, labor disputes, embargoes, shortages of material, acts of God, war, hostilities, acts of the public enemy, actions of superior governmental authority, acts of terrorism (whether threatened or actual), epidemics, quarantines, weather conditions, floods, riots, rebellion, sabotage, other similar causes, or any other circumstance for which the party is not responsible or which it is not within the power of the party to control.

(b) This section shall apply to all acts or situations that have the effect of reducing the number of passengers using the airports in the State, if the acts or situations were not anticipated to occur in the normal course of events. Such unanticipated acts or situations include, but are not limited to, those related to air travel, presence at airports, or use of airplanes. It is understood that actions taken by individuals, groups, or any other entity seeking to injure, kill, or maim passengers or other persons in or about airports or to create the fear of injury, death, or disease in such persons is not considered to be in the normal course of events.

(c) In case of any such failure, delay, interruption, act, or situation beyond the control of a party, the parties may agree to provide relief to a party by canceling the contract or by modifying the contract terms, including the waiver and reduction of rental payments for a period of time. If no agreement for relief is made within a reasonable time, a party may seek relief through the courts or as otherwise agreed to by the parties."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply retroactive to January 1, 2003.