Airports face cash crunch, warns ACI Europe chief

Europe’s airports are suffering “extreme financial distress” and their funding will be permanently changed by the Covid crisis, the head of airports association ACI Europe has warned.

Airports are already operating at a loss, retail income has collapsed and carriers such as Ryanair and Wizz Air are seeking even lower airport charges and more incentives to bring back traffic.

Olivier Jankovec, ACI Europe director general, told the association’s conference the crisis would lead to “a permanent new normal for airport trading”.

He said: “The financial situation of Europe’s airports is deteriorating by the day.

“Europe’s airports are burning €350 million each week. This is down from €600 million in the second quarter due to extensive cost-cutting, [but] this is simply not sustainable. It requires urgent governmental support.”

Jankovec noted Europe’s 20 largest airports have slashed operating expenses and capital spending by €5.6 billion, but said it was not enough given “airports’ fixed costs and need to keep essential facilities up and running”.

He warned a recovery would be “hampered by significant demand and supply pressures” as airports already “face renewed competitive pressures” and “ultra-low cost airlines are set to emerge as structural winners” from the crisis.

Jankovec said: “There are more than 750 commercial airports in Europe vying for traffic. For too long, airlines have seen airports as infrastructure that should be free or as a piggy bank which they can squeeze for change.

“Almost all Europe’s airports offer rebates and incentives to airlines under normal trading conditions [and] 70% have added additional Covid-19 rebates and incentives. They are pricing below costs.”

He said: “Revenues from commercial activities, in particular retail, are also challenged. Airports are bracing for an epochal shift regarding place of purchase, consumption and travel to and from the airport.”

Airports depend on retail and food and drink sales to supplement landing charges that would otherwise leave them unsustainable. But even with this income, two-thirds of airports operated at a loss before the pandemic.

Latest ACI Europe data shows air traffic across Europe down 81% year on year in November and 86% down in the UK and EU.

ACI Europe president Jost Lammers, chief executive of Munich airport, called on the UK and EU member states to make bilateral agreements to relax travel restrictions.

He said: “We are deeply frustrated by the lack of effective coordination and progress at EU level.

“This leaves us no choice but to urge European governments to work with like-minded governments to test air travellers and lift travel restrictions on a bilateral basis.”

Jankovec forecast long-term growth in air traffic beyond the pandemic would fall “as a result of the climate emergency and geopolitical instability”.

He told the conference: “Our airport economic model has been dependent upon continued growth in air traffic. We can no longer assume that will be the case.

“Our industry needs to look to new ways of trading and operating.”

He announced publication of a revised Sustainability Strategy for Airports, first published in 2019, urging airports “to embrace sustainability in the post-Covid era”.

Jankovec noted biometrics, sanitisation and health monitoring “are becoming part of normal airport operations” and said airport charges and commercial revenues “will need to be remodelled with an emphasis on the user pays”.

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