Bluer skies ahead
ACI-North America’s president and CEO, Kevin Burke, talks to Joe Bates about the challenges and opportunities ahead for US and Canadian airports as aviation starts to show signs of recovery from the global pandemic.
How tough have the last 18 months been for North America’s airports and do you think you have fared better or worse than other parts of the world?
The ongoing global pandemic has severely impacted airport finances over the past 18 months and continues to do so. We estimate that the steep, prolonged downturn in passenger traffic due to the pandemic will cost US airports more than $40 billion and Canadian airports more than C$5.5 billion in lost revenues by the end of 2021 –numbers that will only grow if travel restrictions continue.
In relation to the rest of the world, North American airports have experienced many of the same challenges as airports in other regions. The key difference for North America is the phenomenal level of relief for airports from the US government; but the slow trickle of governmental relief to airports in Canada and ongoing international travel restrictions are putting North American airports behind the rest of the world.
ACI-NA successfully led the charge that helped secure $20 billion in immediate financial relief for the US airport industry. How important was this?
The $20 billion in emergency relief funding was a dire need. These funds have helped keep the lights on for airports across the United States, saved thousands of jobs, and ensured that essential airport operations could continue in a safe and secure manner. While this immediate financial relief is greatly appreciated, US airports are facing at least $40 billion in revenue losses through March 2022, as well as increased operational costs to respond to ongoing pandemic-related challenges. Airports quickly implemented short-term solutions like plexiglass barriers and sanitising stations, but they will also need to make long-term changes to the structure of and technology throughout their terminals and security checkpoints.
Thriving airports are critical to our national economy, and each one is an engine of economic activity for its local community. ACI-NA stands ready to continue working with the administration, Congress, and industry stakeholders to ensure that airports have the resources needed to weather this storm and make a full recovery. This is especially important now as the US Congress is working on an infrastructure investment package that would provide $25 billion in new funding to airports and the FAA to make much needed improvements to the nation’s runways, terminals and air traffic control towers.
Do you think the crisis will lead to a revaluation of airport business models with potentially more private investment in US airports in the future?
This has always been a challenge because US airports are so different from other airports around the world. Public-private partnerships have found a foothold at US airports in the last several years and can be attractive options for specific projects where the deals bring operational expertise, enhanced project financial feasibility, new sources of capital investment, or help address challenging project delivery/implementation scenarios. We see these P3 options as another tool in an airport’s capital development toolbox. However, they aren’t right for every project or every airport. Going forward, we see both P3 and more conventional public-development approaches coexisting in the US airport sector.
Is raising the Passenger Facility Charge (PFC) in the US now potentially more important than ever to help fund vital capital projects that might otherwise have to be put on hold?
Absolutely. America’s airports are important economic drivers for their communities and ensuring they are adequately funded is essential to securing our nation’s economic recovery to guarantee continuity in funding airport infrastructure projects once the additional federal funding is exhausted. Airports urge Congress to adjust the outdated federal cap on local PFCs.
The PFC is one of the most important sources of airport funding, but its federal cap has not been adjusted in the past 20 years. The PFC’s purchasing power has been seriously blunted since then, and lifting the outdated cap would directly benefit local economies and jumpstart our recovery in a way that does not cost taxpayers a dime.
Even outside of the economic impact COVID-19 has had across the aviation industry, airports face a backlog of at least $115 billion in infrastructure projects over the next five years. These are projects that would help address critical needs while improving the passenger experience, fostering airline competition, lowering ticket prices, and fortifying our health infrastructure to prepare for future health and safety challenges.
Has the pandemic given the industry the kick-start it needed in terms of the introduction of touchless self-service technology and any other innovations at airports?
Airports have long aspired to implement new technologies that allow for a seamless and contactless passenger experience. While most of this progress had seemed years away, a silver lining coming out of the pandemic has been the rapid innovation and deployment of new technologies that will be here to stay.
For instance, many airports have introduced contactless payment options for concessions and virtual boarding passes to reduce the need for passengers to come into contact with airport workers. US agencies like Customs and Border Protection (CBP) and the Transportation Security Administration (TSA) have also launched pilot programmes to streamline the security process and are testing implementation at airports across the country.
We look forward to continued collaboration as the industry works to introduce innovative new solutions that make for a better passenger experience.
Do you think that many of the new health measures and technologies introduced over the last 18 months are here to stay?
Many of the practices established to enhance airport health and sanitation protocols will remain in place for the foreseeable future. North American airports introduced more frequent cleaning, upgraded cleaning supplies, additional hand sanitiser dispensers for passengers and employees, increased education and training for airport employees and contractors, and many other initiatives to limit the spread of COVID-19.
Part of our industry’s recovery is ensuring that passengers are confident in the measures airports are taking to ensure the health and safety of travellers and employees alike. It’s clear that the passenger experience will look different than it did before. It’s going to be safer, easier, and will only continue to improve with the innovation happening across the industry.
What is the forecast for the recovery of passenger traffic in North America this year and in terms of getting back to and surpassing 2019 levels?
In short, the recovery has been quite uneven across North America. We are forecasting that 2021 traffic in North America will only reach 60% of 2019 levels. Domestic passenger traffic is expected to reach 2019 levels in 2023, while the recovery of international passenger traffic will require one more year, getting back to 2019 levels only in 2024.
Finally, do you have any uplifting anecdotes that highlight the resiliency and the best of the airport industry as we recovery from the darkest days of COVID-19?
Even as the industry actively responds to infrastructure, health, and safety needs brought on by the pandemic, airports remain focused on creating a more sustainable, inclusive, and diverse future for air travel. For instance, we recently announced the winners of the 2021 ACI-NA Inclusion Champion Awards, who are exemplary of the strong work happening to empower minority and women-owned businesses and build a workforce that is representative of the people we serve.
ACI-NA also recently welcomed the airport industry’s global commitment to reach net zero carbon emissions by 2050. To get there, it will take strong support from our governments, airlines, and other industry partners – but much progress has already been made, and we’re proud of the work our member airports are undertaking to reduce their environmental footprint.
We are confident that there is light at the end of the tunnel and much to be done once we emerge from it.