Data and technology will usher in a new phase of operations for airports and concessionaires, two guest speakers on a weekly industry call said Wednesday.
The call, hosted jointly by the Airport Restaurant & Retail Association (ARRA) and the Airport Minority Advisory Council (AMAC), this week featured Kim Becker, president and CEO of San Diego International Airport (SAN) and Ginger Evans, chief strategy officer for CAG Holdings.
Both executives lamented the lack of data that could be used to drive smart decisions on all aspects of airport management.
“We’re all trying to make decisions with very little information at this point,” said Becker. “At San Diego specifically, I’ve really been working with my staff to focus on data-driven decisions. We’re making decisions on where and when to open sections and terminals, where the passenger flow is going and how to space flights out at gates so that we can put customers in front of the concessions. We’re getting better at it but we really have some ways to go, especially when the data that’s coming in is so limited.”
ARRA’s recent report, Facing Facts: the Survival and Revival of Airport Shopping and Dining, calls for smart reopening of airport concessions, urging airports to require opening only when passenger demand warrants.
Data could help guide those decisions. Becker said SAN’s Innovation Lab will seek solutions for automating information on passenger flow and will look to identify solutions using frictionless technology.
Evans added that airports will have to ramp up much more quickly than they might have planned pre-pandemic. Noting a need for computerized controls, tracking and other technologies, Evans said, “You’re going to have to know what’s going on in your building and the only way you’re going to do that is with an automated system.” On the passenger side, touchless technology will be in high demand, she predicted, facilitated through the passenger’s phone.
“You’re going to have all these devices…controlling all these new processes – your queuing, your social distancing, your HVAC – and that may drive you to 5G faster than you would have otherwise implemented 5G. A lot of these are changes that would have happened five years from now [under normal circumstances]. You’ve got to do them today. And a lot of the ‘nice to haves’ are now ‘have to haves’. In spite of the difficult financial situations, if you don’t make those investments you are at a competitive disadvantage.”
Evans noted that the aviation industry in the United States has been slow off the mark when it comes to technology.
“We think of USA aviation as being fast and high tech,” she said. “And really, we’re very slow because of the safety concerns of our industry.” The industry didn’t react quickly when it became clear very early on that the pandemic would be devastating, Evans said. “Quite frankly, we were going to have to pick up the pace and we’re going to have to trust ourselves,” she said. “We’re going to have to come together very, very quickly so that we can have a standard response to get that [passenger] confidence level back up.”
Revenue growth and customer service – two hallmarks of the industry in recent years – may have to take a back seat to safety and security, at least for the short-term, Evans added.
“Prior to COVID, we were really focused on customer service and revenue,” she said. “I think that’s flipped. We’re now really focused on increasing safety and security. It was always a goal, but I think we thought we had that covered and there wasn’t as much focus on it. It is critically important to reduce operating expenses, increase efficiency, increase safety and security. And of course we have this brand new flashing red dot on our goal, which is we must prevent the spread of not just COVID, but respiratory diseases.”
Airports also have to contend with reduced revenue. SAN was one of the first airports to offer rent relief to concessionaires. “We had the ability at the time to do a comprehensive relief program,” Becker said, noting that not all airports were in a financial position to do so. “Our concession relief program includes six months of waivers, and for us that total about $13 million.”
Becker was hopeful for another federal stimulus to help airports weather their financial challenges. Concessionaires are also lobbying for federal funds to help tide them over, as most businesses have been decimated due to the lack of airline passengers moving through airport terminals.
The pain could last for a while. Both Evans and Becker predicted that recovery will likely take far longer than was initially predicted.
Evans pointed to the fact that airlines have been shedding staff through voluntary programs, resulting in far smaller operations than what existed at the start of the year. While she noted that predictions on recovery run the gamut, early signs are that 2021 will be brutal for the entire industry. “I keep hearing that 50 percent number for 2021,” she said, referencing some predictions that the number of passengers next year will be half of what was experienced in 2019.
“That’s a dramatically different starting point for the recovery,” she noted, adding that airlines appear to be using this as an opportunity to retool their businesses.
Airports and concessionaires, she said, “are really going to have to make some, some innovative decisions, but there’s no question that next year, I think, is going to be a really tough year.”
“I think we have to use this time to be really smart and really get ready, roll up our sleeves,” she said. “I know there’s a thousand things to worry about, but part of our time has to be spent looking forward as leaders, because there’s never been a more challenging time.”
Becker also predicted a tough road ahead. Full recovery could come anywhere from 2022 to 2025, according to current expert predictions, she said.
“For an industry that provides roughly 11 million direct jobs, the economic impact is just staggering,” Becker said. “In many ways this will be a reset to the way we conduct business, whether that’s in the customer experience, the way we plan and build out new facilities or just looking at the health of our employees. And ultimately [it will be about] how we manage our own financial strength with the multiple demands. It’s all yet to be determined.
“Right now we’re in survival mode and it will be some time until we have a better indication of what our future holds,” Becker continued. “Until then we have to work together to find some level of financial stability for us and work, especially with our industry partners, to face our challenges together, to make sure we’re prepared for that return of the passengers. The one thing that is similar to September 11th is that we will bounce back. I don’t know how long it will be – nobody does at this point – but we will bounce back.”
