Angela Gittens: Fixed cost burden weighs heavily on airports around the world

INTERNATIONAL. Airports Council International (ACI) World has released its updated outlook for the business, and said that airport passenger traffic and revenues will more than halve in 2020 compared to a year ago.

ACI World estimates a fall of more than two billion passengers worldwide in the second quarter of 2020 and more than 4.6 billion passengers for 2020 (-50.4% year-on-year). The estimated decline in airport revenues is estimated at US$39.2 billion in the second quarter and more than US$97 billion for 2020 (-56.7% year-on-year).

“The impact of the COVID-19 pandemic on airports, the wider aviation ecosystem, and the global economy continues to worsen and represents an existential threat to the industry unless governments can provide appropriate relief and assistance,” said ACI World Director General Angela Gittens.

“As traffic and revenue have collapsed, the airport industry has taken all possible measures to preserve stability, but the challenge remains that a significant portion of airport costs are fixed.

“Airports are critical in the air transport ecosystem which is a key driver of local, regional and national economies and the communities they serve, and this global economic multiplier effect needs to be safeguarded to help underpin recovery.”

The call to action comes against the backdrop of an estimated -90% fall in global passenger traffic in April, with differences by region ranging from -97% in Europe to -70% in Asia Pacific.

Assuming only slight improvements in aviation activity with slow and expected gradual removal of travel restrictions in the summer months, the estimated passenger traffic volume decline is expected to dive further, said ACI. The loss is expected to be -88.4% in the second quarter versus projected levels.

How ACI is projecting traffic losses by quarter and revenues (below) by quarter (click to enlarge)

For airport revenues, the reduction from the projected baseline is likely to reach -90% on a global level in the second quarter of 2020, noted ACI.

Europe is expected to be the hardest-hit region as it may lose close to US$37 billion in revenues or more than -60%, followed by Asia Pacific with US$29.4 billion or -59%. Most of the hit will be concentrated in the second and third quarters, with revenues falling by US$39.2 and US$27.7 billion, respectively.

Last week, ACI World and the International Air Transport Association (IATA) came together to call for urgent financial assistance for the aviation ecosystem.

ACI World has called for a range of relief measures. These include wage subsidy schemes to allow continued operations and a rapid return to full operations; the protection of airport charges and revenues and urgent tax relief. It also includes waivers to airport rents and concession fees and the continuation of charges on air cargo operations to maintain essential airside and cargo facilities. Grants and subsidies, secured financing, loans at preferential rates and bank guarantees should be made available, it added.

“Financial relief and assistance is urgently needed but it is crucial for the prospects of a balanced recovery that any assistance benefits the entire aviation ecosystem and does not target once sector over other,” said Gittens.

The picture region by region for traffic and revenues (click to enlarge)

Travel restrictions

According to the recently released report from the World Tourism Organization (UNWTO), 100% of destinations had restrictions in place as of the end of April.

Some 83% had COVID-19-related restrictions in place for at least four weeks previous.

  • 45% had totally or partially closed their borders for tourists: “passengers are not allowed to enter”
  • 30% have suspended totally or partially international flights
  • 18% banned entry for passengers from specific countries of origin or passengers who have transited through specific destinations, and
  • 7% were applying different measures, such as quarantine or self-isolation for 14 days and visa measures.