ACI World predicts global airport revenue loss of $4.3bn in Q1 2020
By Andrew Pentol |
ACI World is estimating around a $4.3bn loss in total global airport revenues for Q1 2020 due to the Covid-19 pandemic.
Global airport revenues for Q1 2020 were forecast to reach $39.5b before the Covid-19 outbreak. ACI World expects most revenue loss to occur in Asia Pacific with a difference of $3bn in projected revenue. This is equal approximately to total annual revenues of two major European or Asian hubs combined.
Additionally, ACI World is predicting a 12% drop in Q1 2020 airport passenger traffic volume compared to its initial forecast. Asia Pacific is the most impacted region, with passenger traffic down 24% compared to previous Q1 2020 business-as-usual forecasts.
Europe and the Middle East are also expected to be significantly impacted by traffic reductions, while North America is likely to experience similar declines in Q2 2020.
According to ACI World, the effect on passenger numbers and flight cancellations will result in reduced revenues from airport charges. Aeronautical revenues will face similar challenges, but the cost base for airport charges remains unchanged as airports have many fixed costs.
STRONG IMPACT IN EUROPE
Currently, Europe is the second-most impacted region in terms of airport revenue, while all other regions will experience the impact of passenger losses, emphasised ACI World.
ACI World, which favours an evidence-based market-by-market review is also urging a proportionate slot allocation response to Covid-19. This will preserve global airport connectivity. It also says a global suspension of slot rules would jeopardise countries’ ability to stay connected with the world and have knock on effects on economies.
Depending on local circumstances, the relaxation of slot rules to a lower threshold may be considered as a first step. The relaxation will be for markets where airlines are trimming capacity to reflect the impact of lower demand on less impacted routes. In severely impacted markets, a suspension of the 80/20 slot usage rule may be considered for a limited period, in consultation with airport operators, airlines and slot coordinators.
Angela Gittens, Director General, ACI World said: “The airport industry recognises that all stakeholders of the aviation ecosystem are heavily impacted by the Covid-19 outbreak and that strengthened cooperation between airports, airlines and regulatory authorities is needed as the industry responds to the outbreak.
“The sudden shock represented by the Covid-19 outbreak is affecting passenger and cargo traffic worldwide, markedly in Asia Pacific and significantly reducing airport revenues.
“Airports rely heavily on airport charges to fund their operating and capital costs and operators find themselves under intense pressure during periods of traffic decline. Airport revenues must be sufficiently protected to ensure safe and sustainable operations. Measures to limit the collection of airport charges would be ill-advised.”
ACI World and all ACI regions are urging a proportionate slot allocation response to Covid-19 that will preserve global airport connectivity. ACI World and ACI regions believe the aforementioned evidence-based market-by-market review would examine infection rates, load factors, forward booking forecasts and the impact on the environment of continuing certain services.
“As the situation quickly unfolds, and cognisant that the above analysis is based on data from ACI databases and scheduled capacity extracted in early March 2020, ACI World will continue to closely monitor the situation and adjust its advisory accordingly,” Gittens concluded.
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