Covid-19 Becomes an Ongoing Problem for Airports in Europe
The global tourism and hospitality industry has hugely impacted by pandemics as the essence of the organization is always connected to people's traveling. History has shown that, owing to international travel limitations, media coverage and policy initiatives, epidemics and pandemics immediately affect hotels and restaurants, airlines companies, travel agencies and more.
Although the effect of the COVID-19 outbreak was initially negligible and restricted to those airports that provide air services to affected countries in Asia, its spread to Europe has led to a full-size crisis for airports across the continent.
Olivier Jankovec, Director General of ACI Europe said: “Apparently the most affected are airports in Italy at present. Until yesterday's decision to lock the whole country, Italian airports had already experienced a dramatic free-traffic drop–a decrease of over -60 percent in most places over the weekend. Nevertheless, their goal is now to completely collapse air connectivity and to lose the largest part of their income. We urge the Italian Government to respond promptly and positively to the request for emergency aid from Italian airports.”
The situation in airports across Europe is worsening rapidly outside Italy. Jankovec said: “Capacities and air services are drastically cut by airlines in response to decreasing demand due to loss of confidence, modification of company travel policies and government action which restricts mobility in efforts to contain the spread of the virus, directly or indirectly. As a result, the COVID-19 outbreak has become an unparalleled shock in our industry. In addition to Italy, we can not rule out the need for relief action to tackle cash flow pressures and continue to serve their position as critical infrastructure elsewhere at some stage. Governments and the European Commission will need assistance.”
The initial assessment by ACI Europe of the effects on the regional airport operators of the COVID-19 outbreak shows:
· A loss of -67 million airport passengers in the first quarter of 2020, which marks a decrease of -13,5% compared with an ordinary business scenario.
· The total decrease for Europe's airports to -187 million passengers was projected to increase + 2.3% in the usual business scenario, reflecting a decrease in the number of -7.5 percent in a year in 2020.
· In financial terms, a reduction of EUR -1,320 million of Q1 revenues, as a consequence of lower aeronautical revenues, lower trade (non-aeronautical) revenues, and foregone earth handling and other facilities, in contrast to the usual financial quarten.
While the safety of passengers and staff together with collaboration with public health authorities and industry partners is an absolute priority for airports, this situation presents an unique set of operational and financial challenges.
As airports are a critical infrastructure for the operation of society, it is especially important in times of health crises to keep them fully operational and preserve air connectivity. In its COVID-19 guidelines to Governments, the WHO (World Health Organisation) makes this clear. It is therefore important that policymakers should only take into account a last resort and for the shortest time, in compliance with these guidelines, travel bans and other steps that interfere with air connectivity. Airports also need to consider the adoption by governments of ad hoc sanitary protocols for airport infection control, as standard ones may compromise operational efficiency and may therefore not be suitable for purposes. In this respect, European cooperation is important.
Financially, airports are under immediate pressure from cash flow, forcing them to take cost reductions, such as voluntary leave without pay, hiring freezes and postponement of non-essential expenditure. The scope and scope of measures to mitigate airports are, however, limited. The fact that all elements of the airports and their largely fixed cost systems must remain fully in service limit the degree to which they can minimize operational costs through extreme declines. And because airport facilities are, by their definition, immovable, airports are therefore incapable of redeploying their ability to other markets.
In addition to the short-term effect of the COVID–19 epidemic on their financial position, this could also have lasting consequences-given that future sustainable, capability and digitalisation investments rely on financially resilient and stable companies.
A collective approach is of the utmost importance to the crisis both today and as the situation grows between airports, aviation companies and governments and the EU.