One year on: ACI Asia-Pacific’s reflection on the COVID-19 pandemic

Shortly after the 2020 Lunar New Year, I participated in International Airport Review’s coronavirus roundtable to discuss the impact of COVID-19 on aviation, and what was being done by the sector in order to further prevent the spread of the virus.

With the 2021 Lunar New Year behind us, this is a timely occasion to reflect on what happened, what didn’t happen and what lies ahead.

A year ago, we were cautiously optimistic that Asian airports’ 2003 experience of SARS would stand the region in good stead. The rapid spread of the novel coronavirus and the subsequent measures around border closures, testing and quarantine requirements taken by governments around the world quickly made it obvious that the experience and impact would not be comparable.

To briefly recap where we stand now in Asia-Pacific and the Middle East, the most recent forecast shows that the recovery path in Asia-Pacific and the Middle East will be slow and uncertain, with a diverse demand recovery pattern.

Asia-Pacific airports are estimated to close 2020 with a passenger traffic decline of about 58 per cent and are not expected to return to the 2019 pre-COVID-19 passenger volume of approximately 3.4 billion passengers until 2023. Estimated to close 2020 with a passenger traffic decline of about 72 per cent, the Middle East, which served 405 million passengers in 2019, will take until 2024 to return to pre-COVID-19 passenger levels.

International traffic volume will remain weak in the first half of 2021 but is expected to pick up later in the year, as an increasing number of people are vaccinated and travel restrictions gradually eased. 

Domestic passenger volume in general will recover faster than international traffic, as we observed traffic in some larger domestic markets were able to recover quite well in certain periods in 2020 when COVID-19 cases dropped.

A year ago, airports in the region were coming off a five-year growth high. COVID-19 saw our members’ revenue drop by 60 per cent in Asia-Pacific and, the sharpest drop globally, 73.5 per cent in the Middle East.

A year ago, we called for industry and regulators to work together to decide on relief measures to collectively address the challenges and develop regional, if not global, recovery plans for the entire aviation value chain. As early as March 2020, we warned that the prolonged duration of the COVID-19 outbreak would significantly set back the region’s airports from previously forecasted growth prospects. This has been our mantra throughout. As evident in the figures above, sadly, this became the reality for our airport members. The call for relief measures was heeded in some instances but, disappointingly, not in all. Compared to other regions, where the airport sector has received significant financial relief or stimulus packages, this has happened to a lesser extent for our member airports.

Conversely, airports have extended regular and extensive relief packages to their tenants and customers, such as discounts on concession fees for commercial outlets, rentals for offices and lounges and waiving of minimum revenue guarantees.

A year ago, our airport members acted timely and in a measured way without causing panic, due in part to their experience with SARS, existing guidance material from Airports Council International (ACI) on how to manage communicable diseases and guidance from health ministries and authorities. Airports introduced many new health and safety measures to address passengers’ concerns and to ensure that they would feel safe. The customer experience reflected changing needs and expectations of the passenger journey.

Airports also stepped-up investments in technology to provide touchless options throughout the passenger journey at the airport.

In this region, we were encouraged to see the majority of public health authorities, directly or jointly with airport operators, deploying health screening measures, such as temperature checks at the airports.

Airports in Asia-Pacific and the Middle East widely adopted ACI’s new Airport Health Accreditation (AHA) programme to assure travellers that they are taking all necessary precautions for a safe journey through their facilities. To date, more than 50 airports have been accredited and more are in the pipeline. 

Where are we now?

A year into the global pandemic crisis, these efforts made little impact, as many airports in the region are still confronted with closed borders, restrictive quarantine requirements, evaporated traffic and wiped-out revenues. Let’s take a look at the topics dominating the discussion now and how they can support the recovery of the sector.

Vaccines

The rapid deployment of vaccines is a very important component for the sector’s recovery, but the aviation industry simply cannot afford to wait until they become available worldwide. In the meantime, we believe that COVID-19 tests can continue to be largely applied among the travel-risk reduction measures. The tests will likely continue to play an important role even when vaccination will have reached high levels of distribution.

ACI Asia-Pacific has issued a position paper representing the view of the airport industry, with key considerations on COVID-19 testing and passenger health identification to contribute to the discussion on testing and health identification.  

Health passes

Along with ongoing campaigns to regain the confidence of passengers, one of the keys to supporting a sustained recovery will be the establishment of a health data trust framework for safe border reopening and cross-border travel. The World Health Organization (WHO) and the International Civil Aviation Organization (ICAO) should act quickly and concentrate their efforts to meet this objective and facilitate a common smart approach at the global level, rather than a multiplication of national systems based on different criteria.

With a number of initiatives underway, we are supportive of any system that will allow testing and vaccination data to be shared consistently, effectively and in a way that protects the personal data of those using it. It will be important to ensure interoperability between the solutions that meet these criteria for the benefit of the travelling public.

Security

Despite minimising the risk of transmission at the security checkpoint being of great priority, it is equally important for airports to maintain the highest level of security at all times. Our Regional Aviation Security Committee identified a number of challenges for airport security operations when traffic gradually returns, including budgetary cutback on future security investment, security resources being diverted to public health screening, possible new security risks due to COVID-19 or reductions in handling capacity of security checkpoints. With so much attention on getting travel to resume, this important area cannot be neglected.

Capital expenditure

As mentioned earlier, returning to 2019 traffic figures will take until 2023-2024. Looking beyond this timeframe, ACI predicts that pre-COVID-19 long-term fundamentals still apply. Over the next 20 years, Asia-Pacific and the Middle East will be the two fastest-growing regions globally, according to the ACI World Air Traffic Forecasts 2020-2040. Total passenger traffic is forecasted to grow fast at a compounded growth rate of 5.2 per cent in the Middle East and 4.7 per cent in Asia-Pacific.

To meet this long-term demand growth, many airports are still actively investing in infrastructure developments amidst COVID-19. For example, Bahrain International Airport (BAH) just started operations at its new passenger terminal, and Guangzhou Baiyun International Airport (CAN) in China is in the third phase of construction, including a third terminal and two new runways. Several mega-projects, including the building of greenfield airports in Vietnam, India and Philippines are starting construction soon.

Unsurprisingly, COVID-19 has also caused the deferral of capital expenditure projects. Auckland Airport (AKL) in New Zealand has suspended selective projects, including a second runway, and Singapore Changi Airport (SIN) has delayed construction of its fifth terminal, just to quote few examples.

Airports that invested in capacity levels anticipating future demand growth are unlikely to see those traffic levels materialise in the near term, and may not be able to repay debt borrowed, much less interest to equity investors. Arrangements will need to be made with lenders and investors in the short term. In the long term, we will need to find a more sustainable solution for the loss of revenues and the change in operating context.

Sustainability

The pandemic has increased awareness of the importance of sustainable operations post-COVID-19, an objective close to airports’ heart. Throughout the pandemic, airports in Asia-Pacific and the Middle East continued their focus on reducing emissions, meeting even higher standards through the new levels in the Airports Carbon Accreditation (ACA) programme. Christchurch International Airport (CHC) and Indira Gandhi International Airport (DEL) were among the first in the world to attain Level 4 Transformation and Level 4+ Transition, respectively, with Sharjah International Airport (SHJ) joining the ranks of carbon neutral airports in the region. The year ahead will be pivotal as airports adapt to climate change mitigation and move towards ambitious goals.

As we navigate the years ahead, there is one thing that is for certain. The road to recovery will be tough. Continuing to stand together as an industry and putting the wellbeing of our employees, passengers, customers and the planet first should remain our priority.