The latest COVID-19 relief package to hit Congress was passed in the U.S. House of Representatives and awaits consideration in the Senate next week, with many airports, airlines and partners hoping to see it pass with more relief for aviation, as was discussed on Wednesday’s weekly Airport Restaurant & Retail Association (ARRA) industry call.
Stephen Van Beek, director and head of North American aviation for the company Steer, the guest speaker on the call, also expressed hope for aid still to come from the federal government.
“On Congress, there is some talk of additional stimulus, beyond aid, coming this summer,” he said.
Van Beek also spoke to his idea of what recovery will look like in the coming months for airports, saying the larger airports are usually the ones to come back first, but things might have to change across the board for consistent recovery across the country. “Typically, the recoveries work from the hubs going out,” he said. “In New York, we project domestic recovery at 100 percent in 2023.”
That’s not to say the smaller airports don’t have options for staying relevant, but they may take longer to see the same return. “At some airports around there – the secondary airports, the regional airports – that may be ’24, ’25, ’26.
“When you think that you have concessionaires that are in each band… of these airports as the recovery goes outward, it may be that you have different formulas and different ways of sharing risk, different ways of renumerating the concessionaires depending upon where they are,” he continued. “There are some smaller airports right now where the amount of capital investment required… to garner a return on that over the contract period is almost impossible. You may want to move to a new model.”
Van Beek encouraged airports to look at different options for compensation. “The important thing is, airports need to keep an open mind and work with concessionaires and look at different formulas that share risks, but also share success.”
It’s not all on the airports to compromise however, Van Beek said. He went on to remind business partners that if “the airport helps on the downside, the airport’s going to expect to gain on the upside.” Contracts and agreements – including MAGs – going forward need to equally consider both parties’ needs, he said.
Space, Van Beek said, may also need to be reallocated or rearranged completely to more adequately meet travelers’ needs. “It is not unusual at all for airports to respond to changes in business models and traffic by rebalancing loads across their gates and terminals.” While buying airlines out of their terminals to optimize space may only be necessary for a few airports, Van Beek said rearranging concessions programs to create more options for passengers could be a real solution for many.
“In some cases, maybe you could flip concessions space to be in an airport lounge,” he suggested. “Some of the big airports where I’ve tried to get airport lounges – one of the first places we knock on are concessions that are underproducing. So, I think you might see some of that.” Even older airports who have run out of extra room, Van Beek said, could benefit from repurposing space once occupied by concessions.
“Some of it may be repurposing, some of it may be moving people around, some of it may be airports taking more control over their real estate and making sure it’s highly utilized,” he said.
