Lawmakers, agencies debate temporary extension of Lotte concession after Duty Free waiver

Lawmakers and island economic agencies met Feb. 16 for a joint oversight hearing after Duty Free (DFS) sent a letter consenting to a waiver that would permit a one-time extension of Lotte Duty Free Guam LLC’s concession at A.B. Won Pat International Airport for up to three years beyond its July 20, 2026 expiration.

The waiver, read into the record by the committee chair, states DFS "consents to an amendment of section 5 of the settlement agreement ... to permit a 1 time extension of Lotte's existing concession agreement with GIAA for the period of up to 3 years." The letter—addressed to the governor and signed for Duty Free—was distributed to senators and agency representatives the morning of the hearing.

GEDA and GVB officials said they requested quick legislative action to avoid a prolonged vacancy in a major retail space and to protect airport revenue that supports debt-service metrics. "This bill ... seeks steadfast support for the extension of up to 3 years to preserve continuity of operations, to stabilize airport revenues during this recovery period, and to protect the public interest," GEDA CEO Tina Garcia told the committee.

Airport leaders warned the committee an ill-timed solicitation could unsettle bond analysts. GIAA’s deputy executive manager said concession revenues are included in the calculation of the airport’s debt service coverage ratio and that the authority’s bond covenant requires a 1.25 coverage level. She gave a working example: removing roughly $6.7 million of projected concession revenue from FY2026 would reduce the airport’s projected coverage to near 1.19, below the covenant. "Our debt service coverage ratio requirement is 1.25," she said, adding that the authority would provide precise calculations after the hearing.

Several senators urged caution. Chair Jesse A. Luhan and others said if an RFP is published while a legislative extension is under consideration, it could create legal challenges or the appearance of an unfair advantage to the incumbent. Senator Chris Duenas and other members asked the airport to call an emergency board meeting with counsel, the governor’s office and affected parties to determine whether to pause an RFP while the legislature considers a bill.

GEDA and GVB representatives said they sought the waiver to "preserve airport revenues to go through the process of getting a better deal maybe 3 years from now versus today when we're in a state of low revenue," Tina Garcia said. GIAA board leadership said the airport had just received the governor and DFS correspondence that morning and had not yet met with the current concessionaire to clarify intentions.

No formal legislative action was taken at the hearing. Instead, the committee recorded the documents and testimony, urged the airport to convene its board rapidly and asked the administration and counsel to coordinate on timing and communications. The chair recessed the hearing and scheduled continuation for Feb. 24.

What happens next: agencies were asked to (1) convene an emergency GIAA board meeting with legal counsel and the governor’s office, (2) report back on consultations with Lotte Duty Free Guam LLC and DFS, and (3) provide precise debt-service coverage calculations and any legal advice about issuing or pausing a solicitation.