The Pandemic and Airport Life

9795B852-CC90-43F6-B604-3EF9D85F7BA6
There has been a lot of discussion about how the covid-19 pandemic is affecting the airlines, but what about airports? As I’ve mentioned in previous posts, every airport is different so the level of impact will vary depending on the types of traffic an airport has, how their financials are structured, etc. That said, there are some commonalities. I can only speak to what I’m seeing but you can probably draw some parallels to the airports that operate near you.

Like most airports, we get revenue through things like parking fees and concessions. We also get revenue from third parties who pay for the right to do business on airport property (like Uber and Lyft, for example) and through advertising in and around the terminal. We get income from the airlines as well, however those fees are structured to cover the cost of actually operating the airport itself. They pay a portion of terminal costs through renting gate/ticket counter/hold room space, and they cover the costs of airfield and ramp maintenance through landing fees.

CE263ED9-DDA5-403D-B6D7-675D572AB3D5

So, just how bad are the numbers right now? On a normal day in April we’d typically have around 13,000 enplanements (passengers boarding flights). This April there were days when we didn’t even have 500 enplanements. Let’s look at one of the major legacy carriers – we’ll call them Airline A. They aren’t the biggest operator for us in terms of flights or passengers, but they still do a fair amount of business at our airport. In April 2019 Airline A and its regional partners had just over 800 landings and around 67,500 enplaned passengers. In April 2020 they had 150 landings and 5,700 enplaned passengers. That’s a decrease of about 82% in landings and 91% in enplanements. When we widen the view to look at total passengers across all airlines, there was a decrease of approximately 95% in April 2020 compared to April 2019.

4529EAA6-3514-40E7-A43A-35D0C5AD41ED

Needless to say, those numbers are not enough to support the airport ecosystem. Most of the food vendors and shops have closed. At least one has closed permanently. Some of the parking lots had to be closed as well because there were so few cars it made no sense to continue to staff lot attendants or shuttle drivers. As you can imagine, revenue for the month of April was way down.

To try to mitigate the loss of income we’re doing what many other businesses are doing – cutting expenses where we can, and revising the budget to reduce spending as much as possible. We are also scaling back on capital projects, focusing only on those that are essential to the continued operation of the airport. We will be getting some assistance in the form of funds from the CARES act, which will help keep things moving, for awhile at least.

B0DB3EB7-3A57-47B3-9795-F6B4E55C58CA

Then there is the challenge of trying to meet social distancing and other health mandates while being mindful of expenses. Take parking, for example. Anyone who parks in a lot must ride a shuttle to get to the terminal. In order to meet social distancing guidelines, half the seats will need to be blocked off. This may not be such a big deal while passenger counts are low. However, as people return to flying it will become increasingly difficult to accommodate everyone. Do we buy more shuttles? They aren’t cheap.

With so few flights currently, we’ve considered combining the airlines into two concourses and closing the third. On the surface this sounds like a good idea. It would allow the airport to concentrate the efforts of the custodian teams and perhaps allow for reduced utility usage in the unused concourse. Except it isn’t that simple. Lease agreements take time to work through – how do you reassign the gates? How would this affect the baggage systems? And what would it mean for social distancing if employees and passengers are concentrated into two concourses instead of three?

69C0B19F-6E38-4A9B-83E6-825768062EAF

Cargo has been a bit of a lifeline for the airlines, and the same is true for us. While traffic at the passenger airport has been anemic, our nearby cargo airport has seen traffic levels hold nearly steady. Interestingly, many of our regular international cargo carriers did not have any landings in April. However we saw an increase in charter flights which made up most of the difference.

So what does the future hold? Given the unprecedented impact the pandemic has had on the travel industry, it’s hard to say. We will need to be patient and thoughtful. And we’ll need to continue to maintain good relationships with the communities we serve as well as our airline partners. We are, after all, in this together.B0C32904-4CFF-4A2D-94F7-847327DF1BAB

6 thoughts on “The Pandemic and Airport Life

  1. Great article Jennifer. I’m currently studying airport finance in a global economy and everything you said rings true. It will be very interesting to see what airports make a transition and survive, not just here in the states either.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s