When the Covid-19 pandemic struck and we were forced into isolation, the whole nation was unsure of what would happen. Businesses were forced to shut down their operations and the economy quickly and drastically plummeted. With the quarantine restrictions in place and limited to almost no traveling allowed, airports and airlines suffered a huge revenue decrease. Due to this, they were forced to lay off many employees because there was a large supply but very little demand for airport and airline workers. From an analysis published by the International Finance Corporation,
"The COVID-19 pandemic has reduced passenger traffic worldwide. The disruption began in Asia-Pacific, but the rapid spread of the virus and the containment measures implemented in response—such as government recommendations to avoid travel and airport closures—led to a 22.9 percent drop in global air traffic in February and 53.1 percent in 2 March, according to ACI. This was equivalent to a 620 million passenger reduction in the first quarter of 2020. April was a particularly difficult month as passenger traffic volumes declined by 90 percent across the globe."
Before the pandemic, about 56% of airport revenues came from their contracts with commercial airlines and the passengers who travel on these airlines. The rest of their revenue (approximately 40%) came from concessions, parking, and advertisements. Without passengers passing through airports, there was a very limited revenue stream. While travel limitations were in place, causing 2020 airport revenues to decrease by 47% in North America, airline bankruptcies were a real possibility and airport operations were negatively impacted. Now that demand for travel has increased again since the beginning of the pandemic, the structural implications are so great that airports will have a very tough time recovering and operating sufficiently.
This effect on the operations of airports could linger for a long period of time because of a worldwide lower-than-expected GDP growth. Airports are crucial contributors to the economy. They provide people, cargo, and services across the world, so the economy and GDP are immensely impacted when airports cannot function properly. Since the pandemic, airports have been slow in service and more and more flights are getting delayed or cancelled. Although it will differ in different countries and regions, this trend is not going anywhere as the airport industry is not expected to make a fast recovery and could continue to experience problems for the foreseeable future.
Comments