By Dr. Patricia Ryan (Melbourne, United States)
The impact on airports due to the COVID-19 crisis has been dramatic. What actions can airports take to ensure financial solvency in the short term? We will provide examples of the intensity of loss of passengers travelling through airports and airport and tactics for recovery.
Airports have lost considerable revenue from aeronautical and non-aeronautical revenue; therefore, many airports have reduced space or changed the configuration of their airport to become more efficient in the short term. In the United States, passenger traffic through airports has fallen as much as 96% in some markets.
As highlighted below, retail concessions and car parking, both of which have been particularly hard hit by the COVID-related traffic drop-off, typically represents in the order of 50% of non-aeronautical revenues.
Source: Airports Council International
As an example of the situation at many U. S. airports, Memphis International Airport projected losing $8.4 million in revenue in fiscal 2020 as a result of the Coronavirus impact. As a result, the airport drastically reduced its budget as discussed at a recent Board meeting noting the following decreases in non-aeronautical revenue:
- total gross concession revenue decreased by 52% in March 2020 compared to March 2019;
- public parking revenue decreased by 46%;
- rental car revenue decreased by 52%; and
- taxi revenue decreased by 68%.
Airports are preparing for the slow re-start of domestic flights, but will have additional requirements to ensure the safety of crew, employees and passengers. Additional costs will be necessary for the additional sanitary efforts, additional supplies and employees and/or robots to perform required duties.
The entire aviation industry will rely more on technology to process passengers and also move to more touchless delivery options. The aviation industry seems to be cautiously optimistic that flights can be resumed in a staged approach, first domestic then international flights.
Airports are changing requirements for terminal access such as LAX’s Central Terminal Area (CTA) which will restrict access to only:
- Ticketed airline passengers and persons meeting, accompanying or assisting them (airline check-in counters and federal passenger security screening will be open depending upon flight schedules for each terminal); and
- airport and city personnel whose employment requires their presence. (Passenger Terminal Today (April 29, 2002) “Lax to Restrict Access to Three Groups”). Some airports are not projecting a quick return to “normal”.
Los Angeles International Airport
Airport business partners are reeling from the impact of the reduced traffic and some airports are offering relief and deferrals of payments for three months. As an example of one way in which airports are providing relief to their business partners, Miami International Airport Board agreed on a payment to business partners of $64.8 million for relief retroactively to March 1 through May 31, 2020 offering:
- deferred monthly rent payments and other related charges for passenger and cargo airlines,
- waived minimum annual guaranteed payments, rent and related fees for duty free stores, and;
- waived MAG monthly payments and related fees for other concessions, car rentals and operators.
From AAAE Daily News, CFO Atif Saeed, A.A.E., said the recovery for Minneapolis – St Paul International Airport (MSP) and the commission’s six general aviation airports could take “several years.” Budget cuts totaling almost $17 million are being planned for the rest of 2020.
The Airport Consultants Council (ACC) of Airport Council International – North America (ACI-NA) surveyed U. S. airports and business partners on the effect on revenues of the COVID-19 with the following results as noted in ACC Weekly News, April 23, 2020:
- Travel has shut down and a slow startup is expected for most countries. The U.S. has an advantage because of its size and the likely start up of mostly domestic traffic.
(see more details at the end of this article)
Scheduled Airline Capacity by Week Compared to Schedules Filed on 20th January 2020
Source: OAG Schedules Analyser
“Dollar Flight Club surveyed 20,000 of their one million most active members. Results found that while almost 80 percent of participants have canceled their trips scheduled for April and May, over 60 percent of respondents admitted that they will be comfortable traveling within the next six months if travel restrictions are lifted.” Source: Travel Pulse, “How will COVID-19 Impact Airline Travel in the Future”, McKenzie Cullen April 27, 2020).
What silver linings might there be for airports as a result of this pandemic?
Airports and airlines will be more reliant on technology and faster processing through biometrics, etc. Business partners will strive to achieve a seamless passenger experience and share technology and information.
Infrastructure design was already evolving with the change in technology and this is an opportunity to recognize new passenger flow techniques. The aviation industry is resilient and will respond to these challenges effectively.
“Initial results collected from the ACC COVID-19 survey indicated … approximately 95% of respondents have seen no contract modifications. About 65% have not encountered challenges in collecting payments. The remaining 35% have experienced some challenges with 5% reporting those challenges as being major. [Roughly] 40% of respondents indicated they were in the process of, or would be seeking local/state/federal relief options in response to the situation, [while] 60% … said no action on that front has been taken.”