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BLOG: Using technology to navigate COVID-19 Delta variant disruption

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From frequent flight delays or cancellations to an increase in the number of unruly passengers the rebound in air travel this summer came with significant challenges, writes James Pacansky, CFO of Erie Regional Airport Authority.

The Delta variant has already injected more uncertainty into the future of travel, while the forecast is unclear about the impact of the new potentially vaccine-resistant Mu variant. In the face of this, airports must be ready to have increased organisational agility amid industry disruption.

To navigate the continued unpredictability, airports must have clarity into crucial operations and financial visibility, allowing for monitoring and quickly adjusting strategies as outside circumstances change.

By leveraging technology, airports can use the software to achieve the following actions, as well as have increased transparency and traverse the disruptive industry impacts of the global pandemic.

Track expenses for everything

From administration and airfield to equipment and public safety, airports must track expenses for everything. In doing so, airports can offset any unexpected plummet in passenger-based revenue by figuring out where to reasonably trim costs, as well as identifying avoidable spending or more closely managing people’s overtime hours.

It’s also crucial to keep a close eye on important industry metrics, such as the cost per enplaned passenger (CPE). Since the CPE for almost all airports was skewed much higher in 2020, airports should now watch the margins closely to determine if they can reduce the fixed fees for airlines to better service and attract airlines while remaining financially self-sustainable.

Streamline data entry

Additionally, airports should look into streamlining processes to eliminate continuous data entry. For example, rather than recording the same entries month after month, use technology to easily set up recurring invoices once a year for all their airline, rental car, and other annual leases.

By automating many of our previously spreadsheet- and paper-based tasks through technology like BKD Technologies and Sage Intacct, we were able to easily absorb the responsibilities of a staff accountant who retired.

Specifically, implementing Sage Intacct helped the team save around $80,000 annually by not filling that vacancy, not to mention the countless hours saved by not having to manually key in 2,400 budget lines to track month-by-month costs for every individual account.

Be ready to meet government requirements

Meeting the requirements and coordinating the complex multi-million dollar infrastructure improvements funded by the Federal Aviation Administration (FAA) and state grants is not a simple task.

However, having the technology to view budget-to-actuals comparisons, drill down into specific months instantly, and see the broader context of each transaction, reduces the complexity of the requirements.

When we received new economic aid from the CARES Act, it was crucial to demonstrate a sustainable operating cost structure and separate expenses for government-funded infrastructure projects.

While it’s unclear if more federal aid will be coming, the risk of future significant travel disruptions remains high and airports should stay ready to meet government requirements for additional support.

Aim for full transparency

Taking the pulse of an airport’s financial health depends on multi-dimensional reporting that provides complete transparency across key metrics and trends.

Airports must be able to see in real-time a monthly income statement compared to what was budgeted and the year-to-date in order to figure out any necessary adjustments needed. For example, the finance team should be able to allocate certain expenses, such as repair costs, while also spotting patterns and budgeting future needs more accurately.

With unforeseeable COVID-19 disruptions potentially ahead, airport finance teams need to be ready for ad hoc requests for trend analysis or budget comparisons in real-time.

At its worst point in 2020, the impact of COVID-19 led to operating losses of more than 70% of revenues on airline profitability. The decline in revenue for airports was similarly sharp, with the added headache of high fixed costs for services such as safety and security. Going forward, airports must be prepared to use technology to adapt to the shifting sands of global travel trends.

 

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