UK airports to suffer a £4 billion loss in 2020

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The full impact of the coronavirus pandemic on UK airports is proving utterly devastating.

According to the Airport Operators Association (AOA), during the first four months of the pandemic UK airports lost just under £2 billion, the equivalent of more than £150 million per day, or more than £10,000 per minute.

The group predicts that collectively its member airports will lose at least £4 billion in revenue by the end of 2020. This doesn’t account for the multiplier effect on the businesses and wider community within an airport’s catchment.

“These projections reinforce the significant challenges that UK airports continue to face after the worst four months in the history of commercial aviation,” said Karen Dee, AOA’s Chief Executive.

“Whilst we have seen passengers begin to return, passenger numbers are not expected to reach pre-Covid levels for a considerable period and airports will continue to face challenges and pressures unimaginable six months ago,” she continued.

A case in point is Exeter Airport, which despite the Channel Islands-based carrier Blue Islands starting new routes, and leisure carrier TUI restarting its summer holiday programme from 1 August, is cutting jobs. The airport – part of the Regional and City Airports group which also owns and operates Bournemouth, Coventry and Norwich Airports – blames the economic fallout from the coronavirus health crisis for changing the way it must operate. It is understood that 96 jobs will go with those affected employed in a range of roles. They include baggage handlers, air traffic control, ground crew, security and the fire station.

To prevent further job losses and support the sector through the unprecedented crisis, the AOA alongside CEOs of UK airports have written to the Prime Minister Boris Johnson seeking relief from business rates payments for 2020-2021; additional support with employment costs beyond the October end of the coronavirus job retention scheme; funding for the Civil Aviation Authority for the 2020-2021 charging period; and a suspension of Air Passenger Duty (APD) for at least six months to stimulate increased airline activity.

Stating that airports have done everything in their power to weather the storm without specific government support afforded to other sectors, Dee said that the loss of close to £2 billion during the lockdown should serve as a wakeup call to Government. “It should lead them to finally grasp the severity of the challenge and threat that the pandemic has posed and continues to pose to the sector.”

We cannot have a full national economic recovery without a thriving aviation sector; airports are essential components of Britain’s ambition to be a global trading nation and form a vital network for economic stimulus across the UK, levelling up the regions. These figures show that it is high time that the government acts with urgency and supports airlines through the biggest challenge that they have ever faced.

Karen Dee, Chief Executive, Airport Operators Association (AOA).

Domestic and short-haul travel crucial for aviation’s recovery

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Although recent weeks have seen an increase in flight bookings for European destinations such as Greece, Portugal an Spain for July and August, travel to Europe is expected to be 54% lower in 2020 compared to 2019 according to the European Travel Commission’s (ETC) latest quarterly report “European Tourism: Trends and Prospects”.

The report also notes that tourism as we once knew it has ceased to exist. Successful recovery lies in embracing digitalisation and leveraging new technologies to adapt to the ‘new normal’ as well as shifts in consumer behaviour. It also highlights that sustainability will be key in building back a better, more resilient and more competitive sector.

“The COVID-19 pandemic has had a profound impact across the sector,” said Eduardo Santander, Executive Director of ETC. “We have been talking for so long about sustainable growth, climate change, digitalisation and innovation, this is an opportunity to press the reset button, challenge pre-established models and finally take all these matters seriously,” he added.

To minimise the knock-on effects of the outbreak caused by COVID-19, countries across Europe are starting to reopen economies and limit the financial fallout from the pandemic by stimulating tourism and salvaging the summer holiday season.

ETC’s report states that the impact of the global health crisis is becoming clear with European tourism growth expected to remain below 2019 levels until 2023. During the first four months of 2020, Europe saw a dramatic 44% decline in international tourist arrivals compared to the same period in 2019. Data reported by destinations to the months of April/ May reflect the level of disruption caused by the pandemic. Croatia (-86%) and Cyprus (-78%) saw the biggest declines reflecting the sizeable losses of key source markets, such as Italy and the UK.

From January to May 2020, the latest data shows a -96.9% decline in bookings to Europe across all subregions when compared with the same period last year. However, on a positive note, classic summer holiday destinations such as Greece, Portugal and Spain are showing an uptick in flight bookings throughout July and August.

Underlining that the likelihood of a stable and quick recovery of travel demand is likely to be greater for destinations that rely more heavily on domestic and short-haul travellers, the report suggests that global recovery will depend on economic factors and the speed with which travel restrictions are lifted and the risk aversion of potential travellers.

The average share of domestic travellers is at 44.5% within European country destinations, while short-haul arrivals amount for 77$ of all travellers. Combining both arrivals from within the country and reliance on short-haul travel, Germany, Norway and Romania are the most resilient and likely to be quicker and more stable in their recovery. Meanwhile, Iceland, Montenegro and Croatia which all rely heavily on international demand and only have small domestic tourism markets score the lowest with the greater risk in recovery.

Santander concluded: “We must the recovery from this terrible situation to accelerate the transformation and shift to the tourism of tomorrow.”