The Future of Airports post Covid 19
What follows is a summary from a study by Francisco Serrano and Antonín Kazda, University of Zilina, Slovakia, published on the Journal of Air Transport Management (https://www.sciencedirect.com/science/article/pii/S0969699720304841)
The air transport sector generates a total of over 65 million jobs globally (both directly and indirectly). Over half of these are supported by tourism and by moving passengers and freight, air transport plays a key role in this sector, positioning itself as an enabler of the economic development of each country. The ongoing Covid 19 pandemic has required the entire sector, and in particular airport operators, to rapidly adapt to the new context, strongly impacting the business of airport operators, who have guaranteed without interruptions:
- the provision of essential services even in the most difficult moments (from the repatriation of compatriots abroad to the handling of essential health supplies)
- collaboration with the authorities to define new security protocols and redesign an airport customer journey as touchless and seamless as possible.
In order to effectively address the current crisis in the airport sector, there are several areas of intervention on which to focus attention:
- Revision of the cost structure, by balancing the structure of operating expenditure in relation to an unstable demand, subsequently optimizing fixed and variable costs with the new priorities in mind (e.g. structural increase in cleaning costs) and focusing on the efficiency of operating processes.
- Review of investment plans, by immediately freezing planned investments and in the medium-long term by evaluating a remodelling of the planned interventions according to the real needs that the future scenario might require.
- Outsourcing of non-essential activities, pursuing economic savings but above all of greater flexibility, a factor that can be decisive in this moment of deep uncertainty.
Government measures to support the sector
- Economic, financial and fiscal support interventions
- Pro-tempore derogation of the concession terms
- Agreement to postpone the previously agreed investment plans
- Temporary suspension of the use-it-or-lose-it principle for air slots.
Five measures/initiative from government for airport operatorReference (ALG Transport and Infrastructure, 2020
Re-thinking the business model to:
- Search a new market positioning, through the implementation of new business opportunities that leverage the maintenance of the traditional customer base as well as the attraction of new customers.
- Improving customer satisfaction by enhancing the customer experience and the perception of security
- Search for a broader diversification of non-aeronautical revenue sources (e.g. parking, retail concessions, advertising)
Digitalization of operations to:
- Wider use of self-service and contactless solutions for the management of airport processes, in order to contain health risks and reduce costs.
- Use of biometric technologies (e.g. facial/fingerprint/eye recognition) to reduce contacts along the airport journey (e.g. check-in, baggage release, passport control, boarding) and improve the customer experience.
Biometric end to end process at the airportReference (SIA Partners, 2018).
Systemic action to:
- Commitment to recovery through the cooperation with all the players (e.g. airlines, chambers of commerce, trade associations in the hospitality and tourism sector, local authorities…), promoted by the airport sector and aimed at sharing information and adopting a common evolutionary vision for the return to a condition of relative normality.
To summarise: in view of the prolonged uncertainty generated by the Covid 19 pandemic and the serious consequences already observed so far (e.g. drastic drops in the number of passengers, increasing costs due to health precautions, risks of insolvency by airlines and tenants), the more immediate challenge for airport operators is to evaluate possible evolutionary scenarios ensuring the sustainability of the business and the safety of the processes they govern. Looking at the medium term, it will be necessary to re-think the business model in a more structural key (from the diversification of revenues to the digitalisation of the entire customer journey), in order to increase its resilience and respond in an increasingly advance way to the new needs of the traveller.