COVID-19 traffic downturn costing daa €1 million per day

Irish airport operator, daa, today revealed that it is currently losing €1 million per day and has lost an estimated €160 million in turnover so far this year as a result of the COVID-19 pandemic.

It notes that it has operations in 16 countries and that the global pandemic has affected all of its businesses, “which will see the company record significant financial losses this year”.

Traffic at Dublin and Cork airports has collapsed, as passenger numbers have fallen by 99% in April and May.

While the two airports had enjoyed a positive start to the year in terms of traffic growth, the sharp fall in travel in recent months means that overall 2020 passenger numbers have already declined by 55% and will fall further.

And daa’s overseas businesses have also felt the brunt of the collapse in international aviation, as all but one of its ARI travel retail operations have been shuttered.

Domestic flights in Saudi Arabia, where daa international operates a terminal at King Khalid International Airport (KKIA) in Riyadh, were totally suspended in March and only began to resume on a phased basis earlier this week.

With almost no passengers and no shoppers in its airport retail outlets, daa is currently losing €1 million per day, according to the company’s chief executive Dalton Philips.

As a result, he admits that a very significant cost reduction programme is currently underway to address the issue.

He notes that costs have already been cut across the business, staff have been placed on a four-day week, and a right-sizing programme is in progress.

“This is the most serious crisis that has ever faced the international aviation sector and our business,” says Philips.

“Our business and the wider sector have weathered many previous upheavals, such as the recent recession, the impact of September 11, and the 1970s oil crisis, and it will eventually recover from the economic impact of COVID-19. But it is likely to take some time as the short-term future is bleak, and the post COVID industry will be very different.”

While passenger traffic has slowed to a trickle, both Dublin and Cork airports have remained open throughout the crisis in line with Irish Government policy.

Passenger numbers for Dublin and Cork airports could be as low as nine million for this year, compared to a combined 35.5 million passengers last year, according to Philips.

Daa predicts that passenger numbers for 2021 may be about 21 million, which would represent a 40% decline in traffic compared to 2019.

“When Dublin and Cork airports last had that level of passenger numbers, they had between 750 and 1,000 fewer employees, so unfortunately we have to take unpalatable measures to lower our costs across all areas of the business,” adds Phillips.

Essential projects, such as Dublin Airport’s new North Runway and the upgrade to hold baggage screening systems at Dublin and Cork airports – which is a regulatory requirement – will continue.

The airport operates says that it will also seek planning permission for future works during the downturn.

“Ireland should not make the mistakes of the past when it comes to building key pieces of national infrastructure,” stares Philips.

“The North Runway will help boost Ireland’s economic recovery and airport operators need to plan for decades ahead for the benefit of the national economy rather than just manage through the current difficulties.

“During the last downturn, some commentators argued that we should stop building Terminal 2, or that it was a white elephant. Last summer, T2 was effectively full, and it will be full again. Our assets have forty or 50-year lives, and certain parts of Dublin Airport are up to 80 years old.”

During the lockdown, daa has been preparing for the eventual phased resumption of business. Both Dublin and Cork airports have undergone deep cleaning and the airports have been transformed in light of requirements post COVID-19.

“The way in which the public will interact with our airports will change dramatically and as always, we will be putting the safety of passengers and all those who work at our airports first.”

Last year, almost 87 million passengers were facilitated through the airports and terminals that daa either operates or part owns while about 150 million passengers used the airports in which ARI operates travel retail outlets.