How US airports continue to recover from the pandemic

It’s not an understatement to say that the COVID-19 pandemic has devastated airport finances, which (in turn) has severely affected the passenger experience.

But the current state of airports can’t be blamed on the pandemic alone. “Airport infrastructure suffered from chronic underfunding even before this steep decline in air travelers,” according to a report (warning: PDF link) issued in March 2021 by the Airports Council International-North America, which represents airports in the U.S. and Canada.

Related: The votes are in — readers pick the best airports for the 2021 TPG Awards

This underfunding has led to airports prioritizing smaller, more immediate projects — like the maintenance of aging systems and infrastructure — over making investments in larger, higher-impact projects that would modernize and increase airport capacity. It has also led to a $115 billion backlog of planned infrastructure projects and tens of billions of dollars more in delayed or canceled projects, according to the report.

According to Kevin Burke, president and CEO of ACI-NA, the industry wouldn’t have survived without the $20 billion included for airports in the CARES Act, passed in March 2020. Airports must make bond payments every year to cover construction and improvement costs, something that the decrease in air traffic made tougher to do, he said.

“Without a flow of traffic — we were down to 89,000 people passing through TSA checkpoints in April 2020 — we realized that we needed help from the federal government,” Burke said. “We ended up doing a full-out lobbying campaign with Congress to talk about how important airports were for the recovery of the economy.”

The $20 billion kept the airports open, kept employees working and ensured that bills were paid, said Burke. “The $20 billion was a godsend to us, but we’re still struggling. We're not anywhere close to where we were before in 2019 in terms of our passenger numbers, but it is getting better,” he said.

Related: Airports are coming back: Here’s what’s happening now

The Points Guy polled four airports across the U.S. to see how hard they were hit by the pandemic — and learn what they’re doing to recover.

Orlando International Airport (MCO)

Due to the impact of COVID-19, the airport’s $443 million budget for Fiscal Year 2021 stood in stark contrast to 2020’s budget of $593 million, when MCO was on track for 50 million annual passengers, said Greater Orlando Airport Authority CEO Phil Brown.

Notable items of interest in Orlando’s FY 2021 budget included:

• A $150.2 million decrease in gross revenues over the previous year
• An $83.4 million infusion of CARES Act reimbursements
• A $30.3 million decrease in expenditures
• A $1.2 million increase in janitorial & cleaning services
• An increase in budgeted Cost Per Enplaned (CPE) passenger for participating airlines from $5.32 to $13.90 — a jump of over 260%

In response to actual and projected declines in passenger activity and revenue, GOAA put immediate cost-cutting measures in place in 2020 that included $18.4 million in budget reductions for the second half of the fiscal year, a hiring freeze, facility consolidations, cessation of non-essential projects and more than $28 million of project deferrals, said Brown.

Orlando International is known for its robust concessions, which include two Magic of Disney stores and a Sea World outlet. In March 2020, the airport had 124 food/beverage and retail stores. By March 2021, that number was down to 95.

“It should be noted that we kept a minimal amount of concessions open even at the height of the pandemic to ensure a level of customer experience was still being met,” Brown explained. “While limited, passengers always had access to food, coffee and some retail options when they traveled through Orlando International Airport.”

When the pandemic hit, Orlando, like other airports, focused on cleaning and care for the health and safety of the passengers it did have. “We coordinated with local health facilities to make available both testing and vaccines sites in the main terminal, which has been well received by our passengers.”

The airport also had to reduce the scope and size of Terminal C, which was under construction when the pandemic first began, Brown continued. “Given the reduction in passengers and the aviation authority’s practice to construct demand-driven facilities, we reduced the number of gates from 19 to 15 and eliminated a walkway that directly connected the Intermodal Terminal Facility to Terminal C. Plans are to build that walkway at a later time, but that change was made in conjunction with other reductions in a cost-saving measure during the downturn. Our budget reductions totaled $360 million from adjustments made to our entire capital program.”

Orlando had its lowest passenger traffic numbers in April 2020 with 1,500 daily departing passengers reported. Since then, we have seen our traffic climb steadily,” said Brown. “This past weekend, numbers matching 2019 of 65,000 departing passengers were reported."

Cleveland Hopkins International Airport (CLE)

For Robert Kennedy, director of Port Control at the Cleveland Airport System, the timeline of the pandemic was linear — but the effects of it were not. “Some days we looked like we were making progress," he said. "Then the next day, we were falling behind. At our worst point, we were probably losing revenue at about $1 million a week.”

“The difference between 2019 and 2020 was about $11 million from where we thought we would be.”

Tough decisions had to be made, all while making sure airport staff could be operationally agile and fiscally responsible, Kennedy said. “We're a full residual airport, so anything that we don't make up for in our expenses, our carriers have to pick up and they were already bleeding,” he said. “We adjusted our rates and charges monthly because that's how quickly [the pandemic] changed things.”

No airports had been through anything like this, Kennedy said. “I had been through Y2K, an airline bankruptcy, 9/11 and the economic downturn in 2008-09. But in this case, we did not have an idea how long this was going to last. So long-term planning for us became 30 days.”

Cleveland Hopkins International Airport opened just a handful of concessions, many of which were also fighting day by day. “We had places like Chick-fil-A and Dunkin' Donuts open, but all our upscale restaurants were closed,” he said. “One of our biggest challenges was and still is personnel. Starbucks would normally be open 14 hours a day, but it dropped to seven hours a day because of personnel.”

While the airport didn’t have any pending construction projects during the pandemic, it did complete a new ground transportation center that opened in September. “[That project] was delayed almost a year because of [limited] supplies and manpower,” Kennedy said. The airport did announce a $2 billion master plan in May that Kennedy hopes will start in the fall of 2022.

In January and February of 2020, Cleveland Hopkins, formerly a hub for both United Airlines and Continental Airlines, had its highest passenger numbers in the last 12 years. “We were on track for a solid 2020, as airlines continued to add seats here,” Kennedy said. “We had good stuff going on, and then March, it all went [downhill]. April was probably our lowest month, where we averaged about a thousand passengers a day.”

The numbers started slowly rising in May 2021, then the second COVID-19 wave hit, said Kennedy. “Business travelers normally sustain us in September and October, but they weren’t there for us,” he said.

Related: Business travel is surging back sooner than expected, but there’s still some bad news for airlines

Richmond International Airport (RIC)

The Capital Region Airport Commission is the owner and operator of the Richmond International Airport and runs on a July-June fiscal year, president and CEO Perry Miller explained.

“For example,” Miller said, “The first eight months of FY 2020, July 2019 through February 2020, reported record traffic. Starting in March 2020 and for the balance of FY 2020, the total passengers enplaned were 1.62 million, which was 24.5% lower than our fiscal year 2019 enplanements of 2.14 million.”

This drop in passenger traffic directly impacted revenue. Even though less than one-third of the airport's fiscal year in 2020 fell during the pandemic, it saw a 16.4% decrease in revenue from FY 2019 — including a 21.3% drop from concessions and a 24.6% drop in parking revenue.

And despite the domestic surge in travel earlier this year, FY 2021 — which ended June 30, 2021 — was even lower. The airport's total revenues dropped 26.5% compared to the prior 12 months.

According to Miller, “Richmond went from a full complement of 12 stores, including restaurants and news and gift locations in February 2019 to one food and beverage location in each of our two concourses on limited hours and one retail [shop] that floated with flight activity in February 2020. Today, all stores are open, but at limited hours.”

Richmond International Airport opened a six-gate extension to Concourse A this past spring, including a 500-square foot kiosk, The Market on Broad, that opened in September. “While current [passenger] volume in that part of the concourse makes a full build out unfeasible, we can offer a robust kiosk providing food and beverage and retail services in one location, along with a menu created by local chefs,” Miller said.

Some other interesting notes on the airport:

• Amazon Air started operations in June 2020 which — along with the other cargo operators (DHL, FedEx and UPS) — helped fuel record cargo volume, moving commerce during the darkest periods of the pandemic.
• American, Delta, United, JetBlue, Southwest, Spirit and Allegiant are still at the airport. At this point of the pandemic, Richmond International has more nonstop routes than it did prior to the pandemic, along with a new carrier, Breeze Airways.

Richmond International also made operational modifications, while the airport’s major capital projects proceeded as planned.

“The Concourse A expansion was self-funded by the commission with [it] being reimbursed with future Passenger Facility Charge (PFC) funds,” said Miller. “We were cautious in proceeding on commission-only funded projects, but the impact was not great.”

Thankfully, Miller indicated that all of Richmond's Airport Improvement Plan projects proceeded as planned, funded 100% by the Federal Aviation Administration as a benefit of the CARES Act funding.

And passenger numbers are showing signs of life as well. April 2021 was the first month where they were at least 50% of pre-COVID-19 totals, Miller said. “Traffic continued to rise to the point where we averaged around 85% recovery versus pre-pandemic months throughout the summer,” he said. “With the worst of the delta variant behind us (hopefully) and vaccination efforts ongoing, we’re hoping for continued improvement, perhaps to 90% recovery, in the fourth quarter of 2021.”

The airport commission took the downtime caused by the pandemic to return to fundamentals, Miller said. “We surveyed customers and started trying to meet their wishes and address their concerns." This included "obtaining GBAC STAR Facility accreditation for infectious disease prevention and taking more local input in restaurant menus to help create a sense of place,” he said.

Related: 10 airport restaurants so good you won’t want to leave the terminal

Monterey Regional Airport (MRY)

This California airport, located two hours south of San Francisco, saw a loss to its operating income of approximately $2.2 million on a budget of $8.4 million, airport executive director Michael LaPier, said.

Unlike other airports, Monterey was able to keep all of its food and beverage and retail concessions open, thanks to offering them abatements for nearly a year of rent, LaPier said. “They are now still with us, which was our goal. The thought behind our decision was to make sure they were with us when the recovery happened rather than having to find replacement operators.”

Like other airports, Monterey Regional sprang into action to pivot during the pandemic. “We immediately imposed an across-the-board reduction in spending of 20%. We did not impact salaries and benefits for employees, but did eliminate two unfilled positions, separated one employee and imposed an across-the-board salary freeze,” he said. “We implemented very stringent cost control measures to ensure better justification for expenditures and required all expenditures to be approved by senior management in advance and meet a test of need.”

The airport actually did pretty well during the pandemic with its capital improvements program. “We were able to take advantage of what turned out to be a very competitive construction pricing environment,” LaPier said. “In fact, a fairly major infield rehabilitation project was completed during the pandemic at just under 80% of cost estimates.”

The pandemic taught us the importance of having adequate, robust reserves to help offset the impact external, uncontrollable forces can have on operations, LaPier continued. “Further, we learned the importance of developing a diversified revenue stream from sources other than airline activities. It became very apparent early on that airline revenues are quite volatile in nature and somewhat uncontrollable.”

Forecasting the future

As airport traffic has slowly begun to recover, TPG asked Burke of ACI-NA for his forecast going through 2023. “We're predicting 60% of 2019 levels in 2021," he said. "Domestic passenger traffic is expected to reach 2019 levels again in 2023. That seems like a long way off, but it could always change. It all depends on what happens with the vaccine.”

If more people take it, more and more of them will be getting on planes to travel, Burke said. “We've seen more leisure traffic and less business traffic,” he said.

In terms of international travel, that's obviously been slower, said Burke. “That's going to require another year in our view, where we get back to 2019 levels by 2024,” he said.

Orlando International’s Brown anticipates reaching full operations before the end of the year. “We’re cautiously optimistic that our passenger growth and recovery will remain strong into 2022 and well into 2023,” he said. “The largest traffic increases ahead of us are the anticipated returns of the majority of our international passengers, which have been restricted from entering since early last year."

Related: Here’s what we know about the US reopening on Nov. 8

He expects passenger traffic to "jump to 45-46 million annual passengers by 2024 and possibly surpass our previous high of 51 million in 2025."

Cleveland’s Kennedy is also optimistic about the future. “Our forecast at the end of last year for this year was 5.2 million passengers, a 20% increase. Right now, we're on track to reach 7 million by the end of the year, which is not bad,” he said. “We’re on track for 7.1 next year and be back up to over 10 million in 2023.”

Meanwhile, Richmond International Airport reached 989,270 passengers in FY 2021, and forecasts call for 1.9 million for FY 2022 and 2 million for FY 2023, Miller said. And Monterey Airport passenger numbers will also continue to grow, LaPier said. “Passenger enplanements should reach 215,000 in 2022 and 256,000 in 2023,” he said.

In short, airport authorities are bullish about what's to come.

Bottom line

Despite the challenges of the pandemic, airports have flexed to serve their most important customers — airlines and the passengers who fly them.

With so many pandemic-related factors still up in the air — such as new COVID-19 variants, future federal government relief funding, schedules for countries to reopen, what travelers must do to visit different destinations and more — only time will tell exactly when U.S. airports will get back to their pre-COVID passenger numbers and experience.