Due to Covid-19 we face major financial disaster - Faiz Khan

Following the Airports Council International’s official announcement that the COVID-19 outbreak could have a revenue loss of US$3 billion for airports in the Asia Pacific region, Fiji Airports CEO Faiz Khan has said that due to the COVID-19 we face major financial disaster.

Khan says capital infrastructure projects planned in the future will be deferred but those already under contractual engagements have to go ahead.

He says this makes the situation of the airports highly challenging, along with the entire aviation and tourism industry.

Khan says almost all costs at the airports are fixed costs. 

He says every dollar lost in revenue is lost from the bottom line and cash flow.

Khan says in the meantime fixed costs and existing commitments cannot be reduced.

The Airports Council International (ACI) Asia-Pacific has warned the prolonged duration of the COVID-19 outbreak will significantly set back the region’s airports from previously forecasted growth prospects.

World Airport Traffic Forecasts 2019–2040 predicts US$12.4 billion revenue for the first quarter in the Asia-Pacific region in the "business as usual" scenario. The impact of COVID-19 is projected to have a revenue loss of US$3 billion.

The airport association urges regulators and governments to implement well-defined adjustments and relief measures tailored to suit local level contexts.

According to ACI World estimates, Asia-Pacific is suffering the highest impact, with passenger traffic volumes down -24% for the first quarter of 2020, compared to forecasted traffic levels without COVID-19.

Within the Asia-Pacific region, mainland China, Hong Kong SAR and the Republic of Korea remain at the centre of the effects with sizable losses in traffic volumes.

Meanwhile, there is a sharp spike in the number of COVID-19 cases in several countries in the Middle East, expecting to significantly impact traffic downwards by -4.2%, as travellers and airlines adjust their plans and seat offers in the coming days and weeks.

 Against this gloomy background of sharp declines in traffic and passenger throughput, airports’ aeronautical revenues and non-aeronautical revenues are rendering similar declines.

The shortfall in the number of passengers and the cancellation of flights leads to reduced revenues from airport charges such as landing and parking charges paid by airlines, and passenger service and security charges paid by passengers.

While aeronautical revenues are under pressure, the cost base for airport operations remains unchanged as airports can neither close nor relocate their terminals during the outbreak.

“Unlike airlines, who can choose to cancel flights or relocate their aircraft to other markets to reduce operating costs, airport operators manage immovable assets that cannot be closed down. They are faced with immediate cash flow pressures with limited ability to reduce fixed costs and few resources to fund capacity expansion efforts for longer-term future growth,” said Stefano Baronci,

Director General of ACI Asia-Pacific. “For privately-held airports, the situation is even worse as they do not benefit from relief measure but are obliged to continue paying concession fees to governments.”