The World Health Organization (WHO) stated that COVID-19 is no longer a global health emergency. Let’s take a look back at how the pandemic affected the aviation industry.
In March 2021, AviationSource released a book called “Aviation & COVID-19”, where we documented what the effect of the pandemic was on each individual segue of aviation.
The book particularly looked at the time period of March 2020-2021.
Over the course of today, each Chapter from the book will be released for our audience to read for free.
Without further ado, let’s get into it!
Aviation & COVID-19 Chapter 3: The Airports…
Like with airlines, airports around the world have experienced huge downfalls in traffic as people stayed at home during the pandemic.
This applies to general aviation, regional and international airports, with each of the three being hit differently.
Airports are the backbone of the aviation infrastructure. Without them, the system is not able to produce the benefits to the industry it has offered already.
General Aviation
We will predominantly use the United States as an example, as its general aviation presence is one of the largest in the world.
But first, a little brief segue with the United Kingdom.
In the United Kingdom, demand for general aviation dropped significantly by May 2020 compared to the same period last year (Hasell 2020, p. 6):
- Test and training flights – Down by 77%.
- Flights by Aeroclub members – Down by 95%.
- Private flights – Down by 82%.
- Official flights – Down by 16%.
- Air transport operator traffic – Down by 70%.
This is something quite substantial as Business aviation operators, including general aviation airports, contribute around “90 billion EUR in revenue every year and employ more than 370,000 people” (ibid).
Over in the United States, an interesting case study of the struggle was visibly shown at Gainesville Municipal Airport in Texas, where sales of aviation gasoline and jet fuel “dropped to just one-tenth of the typical amount” at the airport (NBAA, 2020).
As the article continues to explain, sales of such goods have declined alongside the level of traffic entering such airports. For example, at Fernandina Beach in Florida, charter flights at the airport dropped by “approximately 80%” and added at the time that “the recent state-wide quarantine order of GA passengers from the New York tri-state area could bring general aviation in Southern Florida to a screeching halt” (ibid).
But in terms of overall numbers in North America, “many general aviation airports have seen traffic reductions of 95%, which has been conveyed as typical given the current climate (Alliance for Aviation, 2020).
Flying schools are the lifeblood of most general aviation airports, particularly in the U.S. In a “survey conducted in late May (2020) by the Flight School Association of North America, [it was] found that approximately 50% of flight schools did not close during the COVID-19 pandemic” (General Aviation News, 2020).
In that same study, it was revealed that 35% did close, with the other 12.7% indicating a limitation in operations to just solo/rental flying only (ibid).
Losses of the flight schools due to the pandemic were anywhere between $100,000-250,000 per school, meaning the potential for lost revenue not just for the school but for the airports hosting them too.
Whilst it was good news that around half of the flying schools did not close, it still represented a sustained level of damage to general aviation airports in terms of the increased costs because of revenue dropping overnight.
The summer showed some considerable promise for general aviation airports, as exemplified by Greenville Downtown Airport in South Carolina.
July 2020 saw the airport surpass its July 2019 numbers, recording 5,803 movements in one month, which was 500 more than the previous year (Leach III, 2020). Joe Frasher, the Director of the airport, attributed this success to flying schools (ibid):
“A good bit of this traffic can be attributed to our five flight schools, all of which are busy. And I would estimate that flight school activity makes up about 50 percent of our total traffic.”
From the business perspective of general aviation, David Knoblauch, the President of Venture Aviation Group LLC also stated that even business travel was growing due to the unreasonable prices produced by commercial airports and airlines (ibid):
“Suppose you just found out that you and two other people in your company need to be in Raleigh tomorrow morning at 9 a.m. for an important client meeting.”
“Last minute, full-fare coach seats for three people on the airlines from here to Raleigh would cost $4,886.”
“But we could fly everyone from Greenville Downtown Airport non-stop to Raleigh and back for just $1,700 in our Beech Baron. That’s a saving of 65 percent over the airlines.”
The same even applied to New York City-based company evoJets which reported that between January to July 2020, “the company had surpassed its entire new client total for all of 2019” (ibid).
Such demand for flying via general aviation means was seen at Alleghany County Airport, where the airport was able to end 2020 down only 10% compared to 2019, of which such behavior demand similar to that of Greenville was seen (Federoff, 2021). As the vice president of Alleghany County Airport, Traci Clark stated:
“We anticipated a significant drop in air traffic. What that was going to look like or how long it would last is what we did not know. “What we saw was a change of behavior, and I think the dip wasn’t as low or as sustained as they saw in commercial [aviation] because people who had the resources to fly private began to fly private”.
The actions from Alleghany County Airport enabled them to sustain the losses as much as possible and were able to turn it around to the point that the numbers surpassed data from 2015.
With personnel such as Clark stating optimism that the general aviation sector has had the worst of the pandemic, it offers a view of looking up and toward the future.
And local governments within the United States are taking notice of this. The Texas Department of Transportation (TxDOT) undertook a study regarding the economic benefits of general aviation airports.
It “found that Texas General Aviation Airports provide more than 48,000 jobs, with $2.5 billion in payroll and $9.3 billion in total economic output”, and in its report actively looked at the way “for local communities to promote, support and maintain local aviation facilities” (TxDOT, 2019).
Whilst the study was before the pandemic began, data like that is something that will not be forgotten about, especially as on both the state and federal levels, General Aviation in the United States offers considerable benefits to the economy and will continue to do so for many years to come.
Regional Airports
In the United Kingdom, regional airports have been hit considerably by the COVID-19 pandemic, particularly during the restrictions imposed by the government.
The biggest case study to exemplify such damage was the demise of British carrier Flybe back in March 2020, which the UK government acknowledges, along with COVID-19, the “constraints on services [this] has had on regional airports, regional economies and connectivity across the UK” (UK Parliament, 2020).
Upon its collapse on March 5, 2020, the regional market went into a frenzy, as the largest independent regional carrier had gone under. At the time, “John Strickland told the PA News Agency that it would be a challenge to get replacement airlines, describing it as difficult but not impossible for many of the routes” (Thicknesse, 2020).
And this was, of course, difficult because “many of the UK’s regional airports were extremely dependent on Flybe for the majority of their services” and had the “challenge of plugging gaps in their programs” (ibid).
An example of such prevalence in the regional market can be seen at Belfast City Airport, of which Flybe carried 1.6 million passengers to and from Belfast in 2019 (ibid).
Whilst the collapse happened at the start of the pandemic taking shape in the UK, it set a precedent for the struggles over the coming months.
As it continued to take shape, the cry for government support strengthened, with the UK Chancellor Rishi Sunak stating “that companies would only receive bespoke support from the government after all other financing options have been explored” (Asgari, 2020).
“The suggestion that government funding is only a last resort is not going to help regional areas sustain their connectivity or objectives that we still hopefully think are important for the country,” said Neil Pakey, chair of the Regional and Business Airports Group, an association for airports with fewer than 3m annual passengers (ibid).
This continued lack of support throughout the pandemic has also resulted in scholars stating that “regional airports will struggle to make it through this crisis” and that those in the industry, a couple of months after the pandemic began, still didn’t know if the government “will step in to bail out regional airports directly or via funding additional Public Service Obligation routes” (Cairns & Murray, 2020).
Regional airports are, of course, in need of government support as they typically tend to struggle to adapt if there are major costs involved, which is usually the case (ibid). This is because of self-reliance on one carrier provides most of the revenue for an airport, which has been seen in the case of Flybe.
Whilst we have seen carriers such as Loganair and easyJet take on more of the regional market in recent months, there needs to be more support for that sector, especially across Europe as well.
A study produced by Airports Council International (ACI) Europe said back in October 2020 that it predicts around “193 airports on the continent face insolvency in the coming months if passenger traffic does not start to recover by the year-end” (Euronews, 2020).
The damage if insolvency occurred would result in 277,000 people losing their jobs and around 12.4 billion Euros disappearing from revenue sheets. Those in the European Commission have been proactive in approving state aid bailouts for struggling regional airports, due to such liberalization of the air transport market Europe-wide, which had expanded the demand for regional airports significantly (Niestadt 2021, p. 2).
Niestadt also took the example of Dubrovnik Airport witnessing significant decreases in traffic, recording an 88.6% decrease compared to 2019, which was only 330,147 passengers in 2020 (ibid). This is compared to nearly 2.9 million handled in 2019.
On top of this, an airport industry connectivity report also stated that more than 6,000 routes served from Europe’s airports in 2019 were still not restored nine months into the COVID-19 crisis, with the city of Linz in Austria reporting the highest decline in direct connectivity at 96% (ACI Europe, 2020).
Those regional airports that are being helped out by the EU’s Temporary Framework, as explained by Romano Pagliari, a senior lecturer with the Department of Air Transport at Cranfield University, “that regional airports owned by local governments have the best chance of riding out the crisis” (Eccles & Hernandez-Morales, 2020).
Relating back to the UK, this is why the government may need to do more in order to support regional airports during this pandemic. One thing that airports, and even airlines, have been calling for is the scrapping of the Air Passenger Duty Tax (APD).
A study carried out by Airlines UK highlighted that even the suspension of APD would “save 45% of the air routes out of the UK that would otherwise be lost due to the impacts of the COVID-19 pandemic,” as well as the potential to lose 600 routes initially without intervention (CAPA, 2020).
However, there have been concerns about APD in the past, especially when it came to country-wide devolution, with the fear that “a decision to lower APD rates in Scotland could draw passengers and airlines away from English airports” and vice-versa, which is why a suspension of APD completely would help give much-needed support to the industry in all countries of the union (HM Treasury, 2016).
Overall, in terms of the way regional airports will survive the crisis, particularly in the UK, the onus is now on the UK government to provide as much support as possible to ensure no category of the airport gets left behind, with the same applying to the entire industry.
International Airports
Like with regional airports, International Airports have felt the worst in terms of passenger traffic, as the pandemic caused an international stand-still of people moving around the world.
In May, ACI predicted that there would be a loss of more than 4.6 billion passengers, representing over $97 billion in lost revenue, with airports taking a $39.2 billion hit overall (ACI, 2020).
International airports have been focusing on measures to make transiting through such a space as safe as possible, which of course, has conflicted with other measures.
As seen in Figure 1, there are many conflicts that came with the COVID-19 pandemic when it comes to getting people back in the air (Eurocontrol 2020, p. 4).
Airports, of course, as a result, will be paying more money towards the measures, so they will have to look at the most effective but most cost-efficient way at doing it to see any benefits in revenue.
This, of course, has shown examples already of not working very well. In February 2021, passengers at London Heathrow Airport complained due to “queues of up to seven hours long” at border control (Davies, 2021).
It was also mentioned that “a union for border control workers said COVID security measures designed to reduce infections was leading to inadequate staffing” (ibid) and that Heathrow Airport even called on the government to allow more staff to work to process passengers quicker.
“When additional measures were implemented at the border, we were clear with the government that they must support the Border Force to ensure appropriate numbers of officials are on duty to minimize queuing in the Immigration Hall.”
“It is deeply regrettable that Border Force has been unable to provide adequate resourcing, despite our many attempts to highlight the implications of not doing so.”
“Leaving arriving passengers to queue for hours is completely unreasonable, and no airport has the space to hold arriving passengers in socially distanced queues for over four hours, as has been the case in recent weeks.”
The UK Government made no apology for this and in essence, placed the blame on passengers for not following the rules (ibid):
“Unfortunately, a large number of arrivals yesterday failed to purchase their mandatory testing packages for the second and eighth days of quarantine in the UK.”
“This caused delays as they were made to purchase them after being checked by Border Force. We make absolutely no apologies for this. Every essential check stops the spread of coronavirus in the UK.”
“These people should not have been allowed to travel without their testing packages, and we are following up with regulators and carriers to ensure the law is enforced.”
Therefore, as mentioned by Eurocontrol, this would be a failure within Figure 1 of the following elements:
- Passenger Confidence in Safety.
- Ensuring Handling Capacity.
- Effectiveness for Health Safety.
Because airports like Heathrow trying to find the perfect balance, it will ultimately erode the financial strength and flexibility of such institutions “over the foreseeable future”, with S&P stating the recovery to be “anemic” in style through “capacity restructuring and heightened counterparty risks of airlines” (CAPA, 2020a).
Another issue that international airports will have is the continued disparity between domestic and international recoveries. While regional airports are being hit just as badly as international airports, regional airfields will recover at a faster rate.
As mentioned by ICAO, “it said that domestic travel demonstrated stronger resilience and dominated traffic recovery scenarios, particularly in China and the Russian Federation where domestic passenger numbers have already returned to the pre-pandemic levels” (ICAO, 2021).
The same was mentioned by the International Air Transport Association (IATA) back in July 2020, when it determined the reasonings behind this disparity (IATA, 2020):
- Slow virus containment in the US and developing economies.
- Weak consumer confidence.
Referring to the slow virus containment in the US affects airports such as Heathrow Airport, whose 2019 passenger traffic for North American flights was 18.8 million (Heathrow Airport, 2021).
Out of the 80.9 million passengers handled in 2019, this represents around 23% of its total traffic, which is hugely significant and is still waiting on the US to get a grip on this virus.
Whilst there is pent-up demand existing for VFR (visiting friends and relatives) and leisure travel, 55% of respondents to IATA’s June passenger survey stated that they do not plan to travel in 2020, which again is still negative news for airports as it is still an area of the market that is not being tapped (IATA, 2020).
Like with regional airports, international airports now have until 2024 to keep things together and in order and will rely on international governments via funding to ensure they can stay afloat, bring numbers back to 2019 statistics as quickly as possible as well as be able to operate safely.
Is Industry Consolidation Needed During The COVID-19 Pandemic?
With Airports and Airlines struggling in the wake of the COVID-19 pandemic, it does beg the question of whether industry consolidation will be needed in order to bolster the aviation industry in these trying times.
Back in March 2021, WestJet CEO Ed Sims was being interviewed by Eurocontrol as part of its Aviation StraightTalk series, where such a topic came up.
This, of course, is not on the scale of airlines merging with each other, which Sims referred to as the Air Canada and Air Transat merger, but more on the fact of airlines, airports, air traffic control, and other facilities coming together as “it would be very helpful for the industry” (Eurocontrol, 2021).
“There is an argument now to consolidate the foundations of the aviation industry to remove the boundaries between airlines, airports, air traffic control and actually say: how do we all have common objectives and how do we all have the game to encourage each other”.
This point was given on the basis that airlines are cutting costs through the increased use of outsourcing, but Sims argues that airlines need to be more involved in the process.
“It is my view that I think there should be a co-investment right across in a country like Canada, where we only have 36 million people in the country. Having that position of equity and, therefore, all of us working towards the greater good of the growth of Canadian aviation for me is more important than who writes the paycheck for the individual because that’s the key to supporting growth”.
This sort of thing is already happening in the United States. In terms of airport charges to the passenger, Sims compared the cost for passengers to the United States, which runs a more industry-based consolidation where airlines invest and expand in the current infrastructure it has. In the U.S., the cost is around $8 per passenger, whereas, in Canada, it is $24 because of the way the government is approaching aviation in Canada (ibid).
He also argues that industry-based consolidation would enable the market in Canada to be more competitive, especially with the current controversy behind the Air Canada-Transat merger, which would see Air Canada own around 94% of the total market share for transatlantic flights.
So, it ultimately begs the question: Does industry consolidation need to happen on a global basis?
It ultimately depends on the way airlines, airports, and governments work with each other to establish this sort of framework. It has worked predominantly well in the United States through such privatization and encouraging airlines to invest in the future.
Industry Consolidation does also place an onus on existing airlines within a single country to think about further investment, especially if governments do not do that during this pandemic.
Such investment would not just set up international and regional airports during the crisis but would set down a foundation for futuristic growth in a world full of innovative technological solutions and more. The main thing that the industry must watch now is the response.
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