Travelers may become accustomed to airports with only basic amenities if the COVID-19 pandemic continues to thwart reopening of airport businesses, contends one airport director.
Tory Richardson, president and CEO of Gerald R. Ford International Airport (GRR) in Grand Rapids, Michigan, said he questions whether customers returning to travel will purchase going forward. “I think that’s a hard question to answer right now with so many of our stores and restaurants closed, but I suspect based on what I witnessed in our airport that unfortunately we are retraining our common guests to figure out how to get by without amenities and services,” Richardson said.
“Our number one complaint right now is the lack of food and beverage available in the terminal,” he continued. “The longer that remains the case, I think it’s going to be harder to win back that customer for all of us. We’re training them to forego the shopping at the airport and make provisions to take care of their needs before they ever get to the airport.”
Richardson was speaking as one of two guest participants on the weekly “survival and revival” call hosted jointly by the Airport Restaurant & Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC). He and Candace McGraw, CEO of the Cincinnati/Northern Kentucky International Airport (CVG), offered their perspectives of the near-term future for airport concessions and air travel in general.
Richardson praised the ARRA and AMAC efforts to keep the industry informed on developments. “We’re all searching for data and trying to learn our way out of this situation,” he said, urging concessionaires to also be open to change.
“I’d ask our concession partners to be open to trying new ideas and new approaches,” he continued. “But that has to be reciprocated – we can’t roll with a heavy fist and force that or make it difficult for you to do that. It’s going to have to be a learning and a two-way street for both of us to figure this out.”
He urged concessionaires to share experiences from markets that might be applicable elsewhere, and to begin rethinking what might be the best approach going forward. “It might just be that we need to rethink through some of those agreements and those concepts [because] what we originally envisioned for service and delivery to the customer might be a little bit different going forward than what it was prior to the COVID pandemic,” Richardson said.
McGraw agreed, noting that “everybody is starving for information.
“The more we can triangulate that information about what you’re seeing domestically and internationally, [the better],” she said. “Many of you are associated with international companies. What best practices can we borrow?” McGraw also urged flexibility and collaboration among concessionaires, airports and airlines.
Local Business Input
Given the ongoing pandemic and slow recovery of air traffic, airports are having to rethink their approaches on a variety of fronts, given the stark reality of lower revenues for at least the next few years. McGraw said she expects CVG to lose about $100 million in revenue from parking, concessions and other tenants in 2020 and 2021. She anticipates 2021 traffic levels will be at about 50 percent of 2019 levels.
“It’s just making us sharpen our pencils relative to our budget,” McGraw said, noting that the airport needs to focus on actions that will deliver “the biggest bang for the buck” but also need to be forward-thinking.
“I think, sometimes, some of my airport colleagues make the mistake of getting so mired in the here and now they forget to look forward,” she said. “We’re also trying to plan for the future, doubling down on different revenue generation ideas that we’re considering, particularly in terms of the innovation of space. I don’t know exactly what the future holds and what folks should be doing, but I say, don’t look, don’t forget about keeping an eye on the future because we will get through this.”
Richardson’s forecast for the return of travel in western Michigan was more optimistic. “We actually polled our top businesses in Western Michigan, [asking] what they see over the next six, 12, 18, 24 months,” he said. “And that information was extremely helpful. Despite what you see in national surveys where everybody’s saying that that business travel doesn’t come back until late 2021 at the earliest, West Michigan businesses are more optimistic and bullish and are saying that they expect to be back in airplanes within the next six months.
“I think we’ll probably see West Michigan back to about 85 or 90 percent within that two year window,” Richardson said. “That’s pretty aggressive, but so far, that’s what we’re seeing.”
CVG also surveyed its key business travel customers in the region. McGraw said the larger companies were more apt to offer limited encouragement for a return to air travel this year, while small and mid-sized companies were a bit more optimistic.
More Federal Aid?
The efforts to forge a path forward include ongoing efforts from both airports and concessionaires to convince legislators that another bailout is needed. Earlier this year, Congress awarded $10 billion in aid to airports, money needed to navigate the extraordinary downturn in traffic caused by the pandemic. Industry lobbyists are asking for another $10 billion for airports and a further $3.5 billion for concessionaires.
Richardson urged the industry to come together with “crisp, concise, on-point messaging” because legislators are being bombarded with requests from a variety of industries. “I think if you keep your message simple, clean and unified, that’s where we have the best chance,” he said. “I am really pleased that the various trade associations are working in concert together because I think that’s going to be our greatest shot for some relief.”
That said, Richardson expressed skepticism that airports and concessionaires will prevail. “I think if I had to put my speculation on it, I see the airlines getting something but the airports and concessionaires, unfortunately not,” he said. “I hope that’s incorrect, but that’s what I’m hearing at this point from the folks that I’m talking to in [Washington] D.C.”
McGraw was more optimistic, nothing that members of the Congressional delegation from her area are cognizant that a vibrant air travel sector translates into jobs. Noting the possibility of Congress reopening discussions on a relief package, McGraw said that “hopefully airports and concessions will be recognized in some way. Would I bet my house on it? No. Would I bet you $5? Yes.”
