The COVID-19 pandemic led to a decrease of US$125 billion in revenue for airports during 2020. The Airport Council International (ACI) said this is “the equivalent to having the 95 busiest hubs in the world having their revenues completely wiped out”. How’s 2021 going to be? Let’s investigate further.
The airport industry has lost billions of passengers
Last year marked the end of a decade of consistent growth in global passenger traffic, said ACI in a statement. The COVID-19 pandemic brought airports and airlines to a halt starting in the second quarter of last year. Since then, some countries have reopened, others have had travel bubbles, but many remain with heavy travel restrictions. Therefore, the whole aviation industry chain has been deeply impacted.
According to ACI, the airports of the world lost 6.1 billion estimated passengers during 2020. Instead of having over 9.4 billion passengers (as it was projected prior to the COVID-19 pandemic), the world’s hubs only received 3.3 billion.
In January, the International Civil Aviation Organization (ICAO) said that COVID-19 brought air travel numbers to 2003 levels.
For 2021, the airport landscape looks slightly better, but just barely. The pre-pandemic projected baseline was 9.8 billion passengers this year. Currently, ACI expects the airports will receive 5.1 billion travelers. That’s a 47.5% decrease or 4.7 billion fewer passengers.
During 2021’s first quarter, ACI expects minor signs of improvement compared to the last three months of last year. Nevertheless, as the vaccination rollout and uptake increases, more passengers will return to travel. The Airport Council expects a significant surge in travel by the end of this year, mainly with leisure travel.
Patrick Lucas, vice-president of Economics at ACI, said,
“There is this pent-up demand, and people do have some accumulated savings and would travel if they could. By the end of 2021, we’re expecting to be in the 45 to 55% range of 2019 levels.”
Airport finances, crippled
The crisis has crippled airport finances all over the world. As traffic declined, airports’ ability to collect charges and generate revenues decreased proportionally, ACI said.
In 2020, the airport industry was expected to generate about US$188 billion. The impact of the pandemic created a 66.3% reduction in revenues; therefore, the hubs worldwide lost US$125 billion in expected gains.
How much is US$125 billion? Patrick Lucas explained,
“If we take a typical airport hub that handles over 40 million passengers per year. Well, these airports generate, on average, about US$1.3 billion yearly. So this amount is equivalent to having the 95 busiest hubs in the world losing all their revenues.”
The crisis will still impact the airport industry this year. ACI estimates that globally, the airports will lose more than US$94 billion of revenues, cutting in half airport expectations. Likewise, airlines expect a net loss of more than US$38.7 billion in 2021.
Is there a silver lining?
Despite the grim outlook, ACI has high hopes for the second half of 2021. Luis Felipe de Oliveira, ACI World Director General, said,
“We hope an upsurge in confidence in air travel provided by vaccination and safety measures should result in the number of people traveling outside of their countries will start this spring and significantly increase by mid-year.”
Some of the largest domestic markets like China and Russia have already bounced back to almost pre-pandemic levels. Other significant markets, like India, Japan, Mexico, Thailand, and the US, are also accelerating their recoveries.
Currently, ACI expects that domestic traffic will get back to 2019 levels by the end of 2023. Meanwhile, international markets will take until 2024, 2025, or even after that.
The regions that are performing the best are Asia-Pacific, North America, and Latin America-Caribbean. Meanwhile, Europe and the Middle East are the most affected regions.
Did you expect airports to have such massive losses? Let us know in the comments.