Panelists brought a global perspective on the weekly “Survival and Revival” call, hosted jointly by the Airport Restaurant & Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC), as airport industry concessionaires continue to battle the adverse effects of the COVID-19 pandemic.
Angela Gittens, director general of Airports Council International – World, and Martin Moodie, a founder at the U.K.-based Moodie Davitt report, shared their assessments of the impact of the pandemic and the route to recovery.
Gittens put the current situation bluntly. “The tunnel doesn’t have a light yet,” she said.
ACI-World has updated its forecast, presenting a grimmer picture than it did just a few weeks ago. “We’re now forecasting we’re going to lose 4.6 million passengers,” Gittens said. Roughly half of revenues will be lost as well, she said, predicting a loss of $97 billion. That includes losses in all global regions, with declines most prevalent in Asia-Pacific but followed “very closely” by Europe, then North America.
Gittens added that larger countries with a high prevalence of domestic travel are expected to see recovery a bit more quickly “if they can contain the virus, and that’s a big expectation.” Regions like Europe and the Caribbean, which have high levels of international travel, will take longer to recover, she said.
Moodie also predicted a painful transition. “We always like to talk in this industry about our sector’s resilience, our ability to bounce back quickly and strongly from the likes of SARS, from the Gulf wars, from terrorism, from financial and economic crisis,” he noted. “That’s all been true in the past. But this time the bounce back will not be rapid. It won’t be strong in the short term apart from in pockets.” He added that any recovery will be going to be linked so much to critical consumer health concerns, to austerity, to what money people have left in their pockets.”
The global impact is also a concern, Moodie said. Even major multinational companies – which in past crises might have been able to rely on operations in unaffected parts of the world – are now vulnerable. Size and reach doesn’t help “if every single one of your operations is being brought to its knees,” he noted. “So size becomes a weakness, not a strength.”
The one positive in the current landscape is that in certain countries, including China, the incidence of new cases and deaths is declining, signaling the beginning of recovery, Moodie noted. He pointed to Hainan, an island province of China, where business is reportedly booming. “I can tell you because it’s Chinese holidays right now, it’s going gangbusters,” Moodie said, adding that duty free sales are vibrant as a result. “I think that tells us a story about once this has gotten under control and people feel safe, they will travel and they will spend,” he said. “But, the airport world and its concessionaires have got to hang on.”
No one knows the timeline for recovery, of course. Gittens said airports globally are trying to assess when and how consumer confidence will return and “what will get [passengers] back on planes feeling confident that their health will be protected. That’s what we’re working on now on a global level, and of course many countries are working on this at national level,” she said.
Asked to share how concessions operators are negotiating with airports globally in light of the pandemic and subsequent drop off in travelers, Moodie noted that many airports are will to negotiate, particularly with regard to eliminating the minimum annual guarantee requirement. In some cases, he added, “the concessionaires have simply taken the matter into their own hands, saying they simply can’t and won’t pay MAG.” Moodie said the contract model that includes MAGs has been debated for years, and the current situation is escalating the conversations surrounding the fairness of the model.
Separately, Tonja Pastorelle, president of Pastorelle Marketing Group, updated participants on AMAC’s #SaveTheTravelExperience campaign. The trade group is asking members of the airport concessions community to record videos that tell their stories.
More than 35 videos have been recorded. “The legislative team is using these videos in their meetings with decision makers,” Pastorelle said. “Your voices are being heard and are really helping to humanize this effort.”
