Economic sustainability of airports in Asia-Pacific region will be hit badly due to coronavirus: ACI Worldwide

Airports Council International (ACI) Asia-Pacific warns the prolonged duration of the Covid-19 outbreak will significantly setback the region’s airports from previously forecasted growth prospects.

The airport association urges regulators and governments to implement well-defined adjustments and relief measures tailored to suit local level contexts.

According to ACI World estimates, Asia-Pacific is suffering the highest impact, with passenger traffic volumes down 24 per cent for the first quarter of 2020, compared to forecasted traffic levels without Covid-19.

Within the Asia-Pacific region, mainland China, Hong Kong SAR and the Republic of Korea remain at the center of the effects with sizeable losses in traffic volumes. Meanwhile, there is a sharp spike in the number of Covid-19 cases in several countries in West Asia, expecting to significantly impact traffic downwards by -4.2 per cent, as travellers and airlines adjust their plans and seat offers in the coming days and weeks.

Against this gloomy background of sharp declines in traffic and passenger throughput, airports’ aeronautical revenues and non-aeronautical revenues are rendering similar declines.

$3-b revenue loss

The ACI World Airport Traffic Forecasts 2019–2040 predicts $12.4 billion revenue for the first quarter in the Asia-Pacific region in the “business as usual” scenario. The impact of Covid-19 is projected to have a revenue loss of $3 billion.

The shortfall in the number of passengers and the cancellation of flights lead to reduced revenues from airport charges such as landing and parking charges paid by airlines, and passenger service and security charges paid by passengers. While aeronautical revenues are under pressure, the cost base for airport operations remains unchanged as airports can neither close nor relocate their terminals during the outbreak.

Non-aeronautical sources of revenue usually serve as diversification of airport income streams, but they also provide an additional cushion during economic downturns. To a large extent, the Covid-19 is impacting Chinese passengers, the world’s largest and highest-spending outbound travel group, creating a wider worldwide effect on airports.

“Unlike airlines, who can choose to cancel flights or relocate their aircraft to other markets to reduce operating costs, airport operators manage immovable assets that cannot be closed down. They are faced with immediate cash flow pressures with limited ability to reduce fixed costs and few resources to fund capacity expansion efforts for longer-term future growth,” Stefano Baronci, Director General of ACI Asia-Pacific, said in a statement.

“For privately-held airports, the situation is even worse as they do not benefit from relief measure but are obliged to continue paying concession fees to governments,” Baronci said.