By Kyle Munzenrieder
By Kyle Munzenrieder
By Terrence McCoy
By Jeff Weinberger
By Ryan Yousefi
By Chuck Strouse
By Terrence McCoy
By Terrence McCoy
Like many trade associations, the owners and operators of duty-free stores around the world get together once a year for a convention that provides opportunities to study industry trends, listen to presentations from their peers, and to pass around business cards in that never-ending endeavor known as networking.
This year's gathering, held in Orlando this past April, included the usual mixture of hard work, sightseeing, and relaxed cocktail chatter. By some accounts, the subject of the most intense gossip, the topic that apparently elicited the greatest amount of curiosity, was the duty-free battle being waged at Miami International Airport (MIA). For the first time in its history, Dade County had decided to select an operator for its fifteen duty-free stores through a competitive bidding process. Until now those stores, which only serve passengers flying out of the country and which do an annual business of nearly $50 million, had been run by Greyhound Leisure Services.
Greyhound's 27-year reign over the duty-free contract at MIA has been the result of a highly questionable business arrangement, a vestige of old-style politics in which a handful of Anglo bureaucrats and politicians could dole out such gifts with relative ease. But as the ethnic and racial makeup of Dade County changed, Greyhound's unchallenged monopoly was bound to come under scrutiny. Three years ago, when Hispanics and blacks for the first time constituted a majority on the county commission, the company's future appeared to be downright bleak.
Some commissioners, in fact, have been openly anticipating the expiration of Greyhound's current contract later this year so that a new company might be brought in, a company that would include Hispanics and blacks among its owners. (Greyhound has not had any minority owners.) Almost two years ago Commissioner Natacha Millan addressed the need to open up the process to competitive bidding. "I just believe that is good government," she said during an aviation committee meeting. "I think that's fair." Greyhound's competitors from around the globe have been equally eager to bid on what is potentially one of the most lucrative airport contracts anywhere.
Then something happened that left the duty-free conventioneers in Orlando shaking their heads in disbelief at the seeming insanity of Dade County. No sooner had the commissioners finally opened up the contract to bid than they severely restricted the number of firms that could compete. And they did so not as a matter of airport policy but as a matter of foreign policy.
Federal law already states that no American company can do business directly with Cuba. But this past April 4, the Dade County Commission decided to dramatically expand that concept by declaring that no company even related to another company that does business with Cuba (or that simply sells products originally made in Cuba) could be awarded the duty-free contract at Miami International Airport. This meant that if an American company is owned by a larger, international duty-free firm, and that international firm sells Cuban cigars in any of its airport stores anywhere in the world, the American subsidiary could not be awarded the Miami contract, even though the American company has no dealings whatsoever with Cuba.
The new rule had the effect of eliminating from competition virtually all the international duty-free companies, because Cuban cigars (and to a lesser extent Cuban rum) are a mainstay in stores at nearly every major airport in the world. Disqualifying the largest and most respected duty-free companies in turn gave a tremendous advantage to a few politically well-connected firms, an advantage some industry insiders believe may have been the true motive behind the so-called Cuban cigar rule. "People were certainly talking about it," says a duty-free executive who attended the Orlando convention and asked not to be identified. "For a long time now the reputation for Dade County has been that it is very difficult to get a clean shake down there. It's a nice airport, in a great market, but the politics are impossible to deal with."
Those politics are not limited to the peculiarities of Dade's diverse ethnic community and its predilection for placing foreign policy concerns ahead of the interests of local taxpayers. Dade politics also includes the posturing of lobbyists and lawyers who market their access to decision-makers in such a way that outsiders come to believe the quality of their proposals is less important than the people they hire to plead their case. "Politics" also refers to the hypocrisy of a minority-participation program that supposedly provides opportunities for struggling black and Hispanic entrepreneurs but which in reality is cynically manipulated to add influential names to proposals in hopes of swaying commission votes.
With that sort of atmosphere surrounding governmental business transactions in Dade, it's no wonder some of those attending the convention in Orlando raised a toast to their good fortune in having nothing to do with Miami International Airport. "We may indeed be developing a reputation that in order to win a contract in Dade County, you have to hire certain local lobbyists and certain local lawyers and local minorities," admits commission chairman Art Teele. "That's not a good reputation to have. And I think the duty-free bid does nothing to enhance our reputation as a world-class city, and probably does a lot to hurt it. There is that negative perception with a lot of people that hometown rules always apply here and that outsiders don't stand much of a chance.