Australia’s major airports have moved to head off airline demands for fee relief with a warning they face a $A500m aeronautical revenue hit due to COVID-19.
The record slump in demand and travel restrictions imposed by governments is prompting airlines to dramatically slash capacity as they look for ways to preserve cash.
Qantas has announced a 90 percent cut in international capacity and a 60 percent cut in domestic flying — although it has yet to spell out the details — and Virgin Australia is expected to add to the pain with further cuts in the next few days.
READ: Massive Qantas cuts see international capacity slashed by 90 percent.
With the hunt on to cut costs, airlines internationally have turned their attention to government charges and airport fees as sources of potential savings.
But the Australian Airports Association says airports are already suffering a $500m revenue hit due to lower passenger numbers at a time their costs are changing little “because of the need to keep runways open and lights on in terminals”.
“We still need to keep our airports safe and secure as we welcome the passengers that continue to fly,’’ said AAA acting chief executive Simon Bourke.
“We must also be ready for the post-virus rebound and continue to plan for a strong recovery.
“Airports are taking a hit to maintain their investment and infrastructure pipelines which are so critical in terms of keeping the airport open and keeping people in jobs.”
Airports have already reported significant falls in February traffic and these are expected to widen under new restrictions requiring people entering Australia to self-isolate for 14 days.
in addition to the unprecedented cuts by local carriers, at least two US carriers have canceled flights to Australia and most major overseas players are rethinking inbound capacity.
The AAA argues aeronautical charges are dependent on passenger numbers so canceled flights and fewer passengers already mean lower payments.
“Both airports and airlines are being seriously financially impacted by COVID-19 and we must work together to make sure we are ready when the recovery comes,’’ Bourke said.
“Further cuts when airline payments are already falling with every canceled flight and empty airline seats would severely limit airports’ ability to support the recovery of our airline, retail and business partners.
“In order for airline businesses to recover when these challenges pass, airports must keep building the runways and terminal infrastructure we know they will need when the industry rebounds.
“The recovery will be strong, just as we’ve seen in the past, and we want to give our partners confidence that we are ready to support them as they rebuild.”
Disclosure: Steve Creedy contributes articles to the AAA’s The Airport Professional
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