Airports and ATMs are unavoidable casualities of COVID-19

April 1st 2020

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Airports and air navigation service providers (ANSPs) are being hit just as hard by COVID-19 as their airline customers. Read More » But unlike carriers, they can’t close down operations. Even if commercial passenger services come to a halt, airports and ATM systems must stay open and fully operational to ensure the safety of other flights – such as cargo services – that are still flying.

The latest Airports Council International (ACI) Asia-Pacific’s revenue forecast said the 2020 impact of the pandemic stands at US$23.9 billion for the region and $5.7 billion for the Middle East, impacting airports of all sizes.

'ANSP revenues are directly related to the volume of air traffic they control. They are extremely vulnerable to the decreasing traffic. But there is no doubt the decrease in revenue could significantly impair their ability to safely and seamlessly handle traffic when the volumes inevitably pick up again'

Simon Hocquard CANSO director general

Preliminary weekly passenger data from January to mid-March at 12 major hubs that handle around 22% of the region’s traffic showed an average decrease in traffic of more than 80% by the second week of March compared with the same period in 2019.

A number of small airports in the region, defined by handling less than one million passengers a year, also are heavily affected by the crisis and the resulting drop in traffic, ACI Asia-Pacific said.

“The updated analysis paints an extremely challenging picture for our airport members who have burnt through about 10% of total yearly revenues in just three months. Every passenger lost by an airline is equally a passenger lost by an airport,” said the director general ACI Asia-Pacific, Stefano Baronci. “Relief measures are needed now for the sake of the entire aviation sector’s resilience to save jobs and allow economic recovery.”

ACI calculated a prolonged pandemic may result in a traffic volume loss in the range of 1.5 billion passengers for the Asia-Pacific.

The Asia-Pacific and Middle East employs more than 63% of aviation industry jobs, providing a variety of services from airport management, maintenance and security to retail outlets, food and beverage and duty-free concessionaires.

Taking into account the rapid developments, ACI estimated the first quarter loss for airports and ATM services in the Asia-Pacific from COVID-19 would be about US$5.6 billion, almost double earlier estimates. A large portion of the losses would come from a contraction in traffic and non-aeronautical revenue. Middle East airports will generate a loss of approximately $1 billion for the first quarter and at least double that figure for the full year, the airport association said.

“Legislators have to carefully balance survival and revival measures, addressing both the urgency of short-term needs with smart initiatives that will facilitate a strong recovery. Several governments are still pondering measures to apply as the crisis unfolds. ACI Asia-Pacific strongly advocates for policy measures that benefit all parties of the aviation sector without prejudice in favouring airlines,” Baronci said.

Like the International Air Transport Association (IATA), ACI Asia-Pacific is asking governments and regulators to alleviate airport slots usage requirements until June 2020, offer aviation sector tax relief and suspend or defer airport operator concession fees to governments.

Like airlines, the sector has requested government financial support, in some circumstances government subsidies, to safeguard the industry beyond the current pandemic.

CANSO (Civil Air Navigation Services Organization) director general, Simon Hocquard, said last month: “While our airline customers are understandably the worst hit, ANSPs are experiencing severe consequences.”

Typical of the pressure airports face is in Australia, where the Qantas Group and Virgin Australia have cancelled all international flying and a significant proportion of domestic services. The Australian Airports Association (AAA) said its members faced a $500 million aeronautical revenue hit from the pandemic when their costs are changing little “because of the need to keep runways open and lights on” in terminals.

“We need to keep our airports safe and secure as we welcome the passengers that continue to fly,’’ said AAA acting chief executive, Simon Bourke. “We must be ready for the post-virus rebound and plan for a strong recovery. Airports are taking a hit to maintain their investment and infrastructure pipelines, which are so critical to keeping airports open and people in jobs.”

Major hubs and second tier airports across the region, from Hong Kong to Beijing, Tokyo Haneda to Singapore Changi, have experienced unprecedented declines in passenger numbers. Seoul Incheon International Airport, South Korea’s main air hub, 60 kilometers west of the capital, has entered “emergency mode” as the number of users nosedive.

The airport is handling 10,000 passengers a day compared with normal volumes of 200,000 a day in pre-pandemic times. If numbers continued to decline, it would have to consider closing terminals, the airport operator said.

Some regulators in Asia-Pacific have heeded airline pleas for relief from fees and taxes during the crisis and some governments have agreed to financial rescue packages. In Vietnam, for example, the Ministry of Transport has cut several taxes and service charges for the aviation industry, including a 50% reduction in take-off and landing fees.

At the same time, the ministry asked the Vientnamese government to apply a minimum tax and a zero fee for specialized aviation services, including catering, ramp and push back services.

The Civil Aviation Authority of the Philippines (CAAP) and the Manila International Airport Authority (MIAA) are deferring payment for take-off, landing and parking fees for local airlines for a minimum of one year. Airlines will have to pay after the crisis is over.

Australia has announced an $430 million aid package of refunds and forward waivers on fuel taxes, domestic air navigation and regional aviation security charges.

Singapore has unveiled a US$33.7 billion stimulus package to counter the impact of COVID-19 on the country’s economy including the aviation sector. An earlier relief initiative of $82 million included rebates on airport charges, assistance to ground handling agents and rental rebates at Changi Airport.

At press time, it was amalgamating some of its terminals. “Safety is the industry’s top priority. Countries have a well-established licensing system to ensure this. In this extraordinarily difficult environment, we are grateful for actions to ease regulatory requirements that do not impact the safety of flights,” said IATA’s senior vice president, safety and flight operations, Gilberto Lopez Meyer.

CANSO’s Hocquard said: “The travel bans and border closures put in place to prevent the spread of COVID-19 are having a major impact on air navigation service providers (ANSPs) across the globe.”

“This has included creating new rosters for operational staff to prevent the spread of the disease and ensure contingency in the event of staff illness – an activity that has proved increasingly challenging, with an unpredictable air traffic picture that changes daily.

“In addition, ANSPs have been working with their States to support national aviation plans for handling public health emergencies and collaborating with neighbouring States, airports and airlines to prepare contingency should staffing levels be hit by a COVID-19 outbreak.

“There is no doubt the challenges we face in contingency and operational planning would benefit from strong coordination between the industry and States. New technologies and infrastructure also are vital.”