Air traffic in the Asia-Pacific region is suffering the greatest impact of the Coronavirus with traffic plummeting as much as 24 per cent, wiping out USD 3.0 billion in revenue for the region’s airports, according to Airports Council International (ACI) Asia-Pacific.
“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,” says Stefano Baronci, director general of ACI Asia-Pacific.
“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. 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 says.
ACI says that passenger traffic volumes are 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 centre of the effects with sizable losses in traffic volumes.
The ACI World Airport Traffic Forecasts 2019–2040 predicts USD 12.4 billion in revenue for the first quarter in the Asia-Pacific region in the ‘business as usual’ scenario. The impact of Coronavirus is projected to have a revenue loss of USD 3.0 billion.
Meanwhile, there is a sharp spike in the number of COVID-19 cases in several countries in the Middle East, 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.
“The severity of the current situation requires a close cooperation between airport operators and policy stakeholders to identify options to tackle the crisis,” Baronci says. He urges that for continued regional prosperity, as all the long-term forecasts suggest, its important to consider the overall sustainability of the sector, starting with the shortage of airport capacity.
Asia already manages more than 50 per cent of the super-congested airports in the world and will need to build the large majority of greenfield airports globally. “Further, it is in the interest of the airports to explore at local level with their main partners relief measures to face the current challenges and recovery plans to incentivise the return to a normalised market,” he says.
“The blanket application of proposals to reduce airport charges or to freeze the application of the 80/20 rule on airport slots globally should not be supported without passing an economic feasibility test and justification by objective evidence,” Baronci adds.
Current slot allocation rules require airlines to use at least 80 per cent of their allocated slots under normal operations at an airport in order to keep them.
“The proposal for a global suspension of 80/20 usage recently made by the International Air Transport Association (IATA) would give airlines the freedom to cancel flights to/from congested airports not necessarily linked to the COVID-19 outbreak, jeopardising the ability for countries to stay connected with the world, which in turn will have knock-on effects on their economies,” ACI warns.
“We are sympathetic with the airlines’ needs to avoid flying empty airplanes simply to retain airport slots. But this should not jeopardise the connectivity of passengers and distort the competitive field,” Baronci says.
He says ACI Asia-Pacific favours an evidence-based, market-by-market review which evaluates rates of infection, load and scheduled bookings. “While we prefer local measures, in the event of a global alleviation package, airports, airlines and slot coordinators should explore the feasibility of a relaxation of the 80/20 rule to a lower threshold or a calculation of the historic rights for airlines based on a shorter period through their respective associations,” he concludes.