Revenue Plummets, Planes Grounded at Alabama Airports

John Sharp
Alabama Media Group, Birmingham (TNS)
Mar 27th, 2020

The coronavirus pandemic has placed many passenger airliners around the world, including Alabama, in a less than lofty position: on the ground. Now airports around the state are enduring a precipitous drop in revenue and enplanements.

It’s been nearly 19 years since the world last saw the unsettling images of parked commercial airplanes lining airports around the globe. That occurred after the 9/11 terrorism attacks on the United States, resulting in all aircraft being grounded for several days.

Chris Curry, the president of the Mobile Airport Authority, was an air traffic controller in England at the time and remembers the sudden jolt to the industry.

“All the airplanes were grounded then, unlike today where airplanes are still flying,” said Curry. “It (the 9/11 grounding) was much more robust.”

While the slowdown in airplane traffic triggered by the coronavirus pandemic is a different situation, it’s also more difficult to say how much longer it will last than 9/11, when the industry slowly rebounded with heightened security measures.

The depressing statistics, as of Monday:

-Birmingham-Shuttlesworth International Airport has seen its operating revenues decline. In the past week alone, automobile parking revenues have plummeted 82%. According to airport spokeswoman Candace O’Neil, the TSA checkpoint activity has been down 54% this month and “down as much as 89% on certain days within the past week.” She said that three weeks ago, the TSA checkpoints ranged between 3,000 to 4,700 people per day. Now, the activity is less than 1,000 people per day.

-Huntsville International Airport is anticipating an astonishing 75% drop in revenue, projecting that over the next three months that the airport’s revenue loss will be $7 million to $10 million.

-Passenger enplanements are down 65% at Mobile Regional Airport and down 50% at the Downtown airport, according to Curry.

-Montgomery’s revenues are down 60% on items such as parking, customer facility charges, rental car fees to the airport, concessions, etc.

-According to the Aviation Council of Alabama, Auburn University Regional Airport is currently experiencing a 95% reduction in flight school operations, and is experiencing a projected loss of $600,000 in the next three months. Tuscaloosa National Airport is reporting losses in the 20-30% range, the council reports. Dothan Regional Airport has also been hit hard.

“While all our airports operate independently, the challenge are facing right now is the same – immediate decline in revenue that was expected,” said Todd Storey, president of the aviation council, in a news release updating the status of the state’s airports.

One operational issue Curry and airline officials throughout Alabama are also scrambling to address is making sure they have enough room to allow airlines to temporarily park their aircraft while the traveling industry recovers from the coronavirus pandemic.

At Mobile’s Downtown Airport at the Brookley Aeroplex, 13 airplanes are parked, and Curry is anticipating a total of two dozen arriving in the near future.

“We may entertain parking narrow bodies such as the (Airbus) A320s there,” he said. “We are putting parking plans together now to make sure we understand our capacity.”

At Birmingham-Shuttlesworth, 64 Delta aircraft are parked throughout the airport. Huntsville International and Montgomery Regional have also been told to be on standby in case more planes need to temporarily parked during the pandemic. According to a Wall Street Journal article published on Monday, U.S. airlines are preparing to shut down and virtually ending all passenger flights in the country during the coronavirus pandemic.

Curry said he doesn’t foresee the entire industry grounded to a halt like it was during 9/11. He said a lot of that depends on what happens in Washington, D.C.

“I think a lot of the airline’s decisions are specifically contained in the stimulus plan,” he said.

‘Harrowing scenario’

Right now, Alabama’s airports are not reporting any immediate layoffs even though some airports have been hammered by unimaginable losses in revenues for the next three months.

Airports in other parts of the country are slashing jobs as the coronavirus rattles the industry: Close to 80 workers have been laid off at Baltimore-Washington International Thurgood Marshall Airport, and 310 from Dulles International Airport in Washington, D.C. Layoffs are also occurring at other large airports in New York City, Philadelphia, Chicago and Orlando.

Delta Airlines placed 10,000 workers on unpaid leave, while American Airlines sent layoff notices to 11,000 employees.

“It’s a harrowing type of scenario that is going on with travel,” said Marshall Taggart Jr., the executive director at Montgomery Regional Airport.

Contingency plans

Indeed, Alabama’s commercial airports are suffering since restrictions began on travel since the COVID19 outbreak began two weeks ago. Cost cutting measures have started. The contingency plans include:

-In Birmingham, airport officials implemented a hiring freeze, reduced expenses by freezing staff travel and overtime, and projects funded by the airport are postponed.

-Huntsville is operating “in mission critical mode,” according to Kuner, which means the airport is operating with two teams that alternatives weekly from working inside an office while the other works from home.

“This is our plan going forward so that if we have someone who tests positive that we will still have another team of folks who can operate the airport onsite,” said Kuner.

-Montgomery has put its future long-range expansion plans on hold for the now. Taggart said plans to add an extra baggage carousel and improvements throughout the facility as well as a new on-site hotel, will be delayed.

-Mobile is operating on a “day-by-day basis” acknowledging the fluidity of the coronavirus crisis as airport officials explore “aeronautical and non-aeronautical revenue sources to soften” the financial impact, according to Curry.

Mobile, however, is still on target to push ahead with a switch of commercial operations from Mobile Regional Airport in west Mobile to the Downtown airport at Brookley. The conversion is part of an ongoing study that is expected to be completed this year.

Curry said the switch, however, won’t likely by buoyed by new carriers entering the Mobile market. He said the switch will involve the three legacy carriers – American Airlines, Delta and United.

And he said he believes COVID-19 “could expedite” the switch of commercial activity as airlines seek financial relief and as the Downtown airport offers a lower cost structure for them to operate, Curry said.

‘Disruption’

Some of the airport officials as well as industry analysts believe there is reason to be confident in a bounce back because the industry’s economic fundamentals before coronavirus crisis were solid.

The biggest concern, they say, is when the passengers will flock back to the terminals without being worried over the spread of COVID-19.

“The load factors for us were 75-80% full about two weeks ago,” said Taggart at Montgomery Regional where close to 390,000 passengers flew through in 2019, representing the highest total since 2010. “Everything just started (last) Monday.”

He added, “I think (the airlines) will (bring back passengers) with incentives, reduced pricing, and you will see a lot of things unprecedented in the industry to grow traffic,” he added. “I’m very optimistic.”

William Gartner, a professor within the Department of Applied Economics at the University of Minnesota, said the airports need to brace for a disruption that will last as long as people are afraid of coronavirus.

“This economic disruption was not caused by underlying fundamental weaknesses, but it is having a severe impact on our economic foundation,” said Gardner. “I do not see an immediate return to normal traffic loads once the virus is under control. The amount of time it will take for air traffic to return to pre-virus levels will be based more than anything else on consumer sentiment and psyche.”

‘Critically crippled’

Airports have been largely vacated in the past week following orders throughout the country for people to social distance and avoid groups of 25 or more people – an almost impossibility at most terminals.

Kim Kenville, a professor at the University of North Dakota’s John D. Odegard School of Aerospace Sciences, said she doesn’t anticipate airports closing as the crisis continues. She said they are considered “critical infrastructure” by the federal government, which means they will remain open as coronavirus continues to spread.

Staffing, though, will likely be tight.

“My guess is that most organizations don’t have deep reserves to keep funding employees, so there could be layoffs,” Kenville said. “Airline bankruptcies could emerge and then they would not be paying rent/commissions either.”

The Aviation Council of Alabama and other airports are hopeful that Congress can come through with assistance.

Storey, the president of the state council said he hopes the federal government can provide enough emergency assistance to help offset the unexpected losses. He said without the help, the airports could be “critically crippled.”

U.S. airports are asking for $10 billion from Congress as part of an overall stimulus plan federal lawmakers are considering. Airlines, as part of a $2.5 trillion U.S. House plan, would get $37 billion in grants.

Said Kuner, at Huntsville International, “Our hope, alongside airports across the country, is that the federal government will provide emergency assistance for the airports.”

Even so, will airports be safe places to go if social distancing restrictions are lifted, but the coronavirus continues to spread?

Brandon Brown, associate professor at the Center for Healthy Communities in the Department at the University of California Riverside School of Medicine, said the virus will continue to be a problem for the travel industry.

He said that airports contribute to the spread of COVID-19 simply by their nature as travel centers.

“Airports are often filled with thousands of people, with limited personal space and lots of touching of surfaces,” said Brown. “If one person is shedding virus, it becomes simple to spread the virus to others, either through physical touch or aerosolized particles.”