Covid restrictions nearly halved airport revenues in 2020

Air travel restrictions imposed during the Covid-19 pandemic almost halved airport revenues in 2020, according to the annual Airport Economics Report and key performance indicators (KPIs) by Airports Council International (ACI) released earlier this week.

The report, which provides a global analysis of airports’ financial activities during the first year of the coronavirus outbreak, revealed that total revenue fell by a whopping 43.4 per cent year-on-year in 2020.

“Airports are multifaceted businesses, engaging in commercial relationships with airlines, passengers and concessionaires among others, making air traffic the lifeblood of the airport business,” ACI senior analyst of airport economics Catherine Joyal said.

“The Covid-19-related travel restrictions, lockdowns and other adverse effects led to the collapse of air transport demand and placed the airport business in a precarious state,” she added.

The report takes into account airport industry revenues by source, their expenditures, as well as relevant financial trends seen across the sector.

The key performance indicators, which accompany the report, give further details about the performance of airports during this time.

This includes the productivity of fixed assets, financial and employee performances, as well as other airport operation figures and statistics.

The revenue that airports generate has two main sources. These include aeronautical activities, meaning any income generated through fees imposed on all users and passengers of airport facilities, as well as non-aeronautical activities.

Non-aeronautical activities include such activities as retail sales, among others.

The split between the two revenue sources had remained mostly steady over time, but this was disrupted by the pandemic, with revenue from the former category suffering much more than the latter source of income.

Predictably, the sharp fall in airport traffic was the primary reason behind this change in the previously stable revenue source balance.

The organisation explained that income generated from aeronautical activities is significantly more dependent on the sheer volume of passengers than non-aeronautical revenue.

“In 2020, aeronautical revenue continued to be the most important source of income for airports, representing 47.8 per cent of the total (down 6. percentage points from 2019), whereas non-aeronautical revenues made up 38.8 per cent (down 1.4 percentage points from 2019) and non-operating revenue represented a smaller proportion of the total at 13.5 per cent (up 7.8 percentage points from 2019),” Joyal explained.

“During the pandemic, several jurisdictions also saw airports receiving grants, subsidies and other pandemic-related help packages that increased the share of non-operating revenue,” the analyst added.

Based on the report, in the category of aeronautical revenue sources, passenger charges and security charges saw the sharpest fall in 2020.

Passenger charges declined by 65 per cent year-on-year, while security charges fell by 61 per cent when compared to 2019.

In terms of non-aeronautical activities, these included a 65.2 per cent year-on-year drop in retail concessions.

Airport costs, which include significant fixed costs such as runways, taxiways and terminal buildings, fell by 9 per cent year-on-year in 2020.

Moreover, operating expenses comprised 59.5 per cent of total costs in 2020, a 5.9 per cent decrease over 2019.

Capital costs made up for the remainder of total costs and reached 40.5 per cent in 2020, 5.9 per cent higher than in 2019.

“Even though total airport costs dropped in absolute terms, costs on a per-passenger basis increased 89.6 per cent as the decrease in passenger traffic is significantly larger than the decrease in costs,” the ACI report explained.