Asia-Pacific Airports predict a 24 percent fall in first-quarter passengers

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March 09, 2020
Asia COVID
Photo: Changi Airport.

COVID-19 is expected to slash passenger traffic at Asia-Pacific airports by 24 percent in the first quarter and cut revenue by $US3 billion.

Airports Council International has warned the prolonged COVID-19 outbreak will significantly set back growth prospects for the region’s airports, with mainland China, Hong Kong and South Korea the hardest hit.

The airport industry group urged regulators and governments to implement relief measures but called for an economic feasibility test on a push by airlines to get slot allocation rules suspended.

READ: Coronavirus prompts Air New Zealand to can earnings guidance, slash capacity.

The airports suffer because the passenger shortfall and flight cancellations mean reduced revenues from charges levied on airlines.

“Unlike airlines, who can choose to cancel flights or relocate their aircraft to other markets to reduce operating costs, airport operators manage immovable assets that cannot be closed down,’’ said ACI Asia Pacific director-general Stefano Baronci

“They are faced with immediate cash flow pressures with limited ability to reduce fixed costs and few resources to fund capacity expansion efforts for longer-term future growth.

“For privately-held airports, the situation is even worse as they do not benefit from relief measure but are obliged to continue paying concession fees to governments.”

Baronci said there should be close cooperation between airport operators and policymakers to identify options for tackling the crisis.

On the airline move to suspend slot allocation rules, Baronci said this should not be supported without an economic feasibility test and objective evidence.

The rule requires airlines to use at least 80 percent of their allocation of slots in order to keep them.

He said the proposal by the International Air Transport Association would give airlines the freedom to cancel flights to and from congested airports not necessarily linked to the COVID-19 outbreak, jeopardizing their connectivity with the world.

“We are sympathetic with the airlines’ needs to avoid flying empty airplanes simply to retain airport slots,’’ he said.

“But this should not jeopardize the connectivity of passengers and distort the competitive field.

“ACI Asia-Pacific favors an evidence-based market-by-market review which evaluates rates of infection, load and scheduled bookings.”

The International Air Transport Association last week predicted  2020 global airline revenue losses due to COVID-19 of up $US113 billion, depending on the severity of the outbreak.

In the Asia-pacific, IATA estimated passenger numbers would fall by 23 percent and airline earnings would cut by almost $US50 billion across Australia, China, Japan, Malaysia, Singapore, South Korea, Thailand and Vietnam.

The rest of the Asia-Pacific would see a $US7.6 billion loss in airline earnings due to the coronavirus and a 9 percent fall in passenger numbers.