Global airports to lose US$4.2 billion in revenues in Q1 as a result of COVID-19, says Airports Council International

Angela Gittens: “Strengthened cooperation between airports, airlines, and regulatory authorities is needed”

INTERNATIONAL. Global airport revenues will be down at least US$4.2 billion in the first quarter of 2020 compared to pre-COVID-19 forecasts, according to Airports Council International (ACI) World.

The loss is approximately equal to the total annual revenues of two major European or Asian hubs combined, the organisation said. ACI previously estimated that global revenues would reach close to US$39 billion, with the expected decline based on traffic trends under COVID-19 and constant unit revenues.

Most of the loss in revenues is expected to occur in the Asia Pacific region, with a difference of US$3 billion in projected revenue. An estimated loss of US$1 billion in Europe makes it the second most affected region. ACI noted that all regions will see a revenue impact from the loss of East Asia passengers.

Non-aeronautical revenue will be strongly impacted by the COVID-19 outbreak, ACI said. Chinese passengers in particular “tend to generate comparatively high revenue for retail concessions and other non-aeronautical services”. ACI noted that non-aeronautical revenues are usually seen as an “additional cushion” during economic downturns, but the heavy impact on them will “create a wider effect for airports worldwide”.

The forecasts were published in an advisory bulletin on the predicted global economic impact of COVID-19 on the airport industry, which ACI said would be “pronounced”.

Source: ACI World. Click to enlarge.

At the global level, ACI estimates that airport passenger traffic volume for the first quarter of 2020 will be down at least 12 percentage points compared to what it previously projected.

Asia Pacific will be most affected, with passenger traffic volumes down 24 percentage points compared to previous ‘business as usual’ forecasts for the first quarter of 2020. Europe and the Middle East are also expected to be significantly impacted by reductions in traffic. North America is expected to see similar declines in the second quarter of 2020, as ACI noted recently-announced service reductions in the region, with more expected in the coming weeks.

“In addition to the official bans and restrictions on travel, sharply reduced business and leisure travel, there is a general travel confidence issue causing consumers to pull demand forward, events being cancelled, and businesses reducing their normal activity,” ACI said.

ACI Europe earlier forecasted a -13.5% year-on-year drop in regional passenger traffic in the first three months, and -7.5% for the full year.

In the advisory bulletin, ACI World also called for a proportionate slot allocation response to COVID-19, with the aim of preserving global airport connectivity. “A global suspension of slot rules would jeopardise the ability for countries to stay connected with the world which will in turn have knock on effects to economies,” ACI said. “ACI World favours an evidence-based market-by-market review.”

Source: ACI World. Click to enlarge.

ACI World Director General Angela Gittens commented: “The airport industry recognises that all stakeholders of the aviation ecosystem are heavily impacted by the COVID-19 outbreak, and that strengthened cooperation between airports, airlines, and regulatory authorities is needed as the industry responds to the outbreak.

“The sudden shock represented by the COVID-19 outbreak is affecting passenger and cargo traffic worldwide, markedly in Asia Pacific and significantly reducing airport revenues.

“Airports rely heavily on airport charges to fund their operating and capital costs and operators find themselves under intense pressure during periods of traffic decline. Airport revenues must be sufficiently protected to ensure safe and sustainable operations. Measures to limit the collection of airport charges would be ill-advised.”

The advisory bulletin is based on information in ACI databases and on scheduled capacity, extracted in early March 2020. ACI said it would continue to monitor the situation and adjust its advisory accordingly.

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