Skip to main content
Start of main content

How can airports prepare for future operations during a time of so many unknowns?

July 16, 2020

By Michael Musgrave

A strategic approach to asset management can help airports navigate current financial, operating, health, and environmental issues

With the 80-95% reduction in air passenger traffic during the second quarter of 2020—and what looks to be a slow recovery in travel overall—airports face several difficult questions that must be addressed while both responding to current COVID-19 concerns and planning for the future operating environment. As current capital projects are under construction and many more are being designed and planned, the immediate questions we must ask ourselves are:

  1. If I continue to finish projects under construction, how should I balance “expansion project plans” with new COVID-19 required improvements?
  2. When will passenger traffic return to peak 2019 levels?
  3. How should I invest limited capital funding to achieve the best return on investment from a cost/benefit perspective?

As the former Manager of Public Works responsible for the construction and operation of the Denver International Airport, my experience tells me it can be helpful to first look back at potential “lessons learned” from past aviation industry disruptions for guidance in these uncertain times.

Looking at the past may provide insight for the future of airports

Besides the COVID-19 pandemic, there have been three other major events in the last 20 years that can provide a historical perspective in the airport industry:

  1. September 11, 2001—The 9/11 terrorist attack stopped all air travel for two days and the system experienced an overall reduction of 31% for the five months following
  2. The Great Recession of 2008—Airlines did not return to profitability until 2010
  3. SARS—This pandemic had a significant impact on airports in Asia and required a significant “re-tooling” of air travel as it relates to health issues.

The lessons learned from historical traffic shows a different impact on long distance domestic travel, domestic short-haul travel, and regional airport travel. The impacts are described in the graphic below.

As you can see in the graph:

Long distance domestic flight volume came back first (orange line)

  • Shorter distance travel came back slower due to anxiety around flying and increased security time (dark gray line)
  • Regional flying never recovered as car substitution turned regional air travel less than 500 miles into a high-priced business traveler focused segment (blue line).

Since the COVID-19 virus started spreading globally in February 2020, US air passenger traffic has dramatically reduced—for obvious reasons. Estimates indicate a 53% reduction in March and nearly a 95% reduction in April. Air traffic is now very slowly coming back, but this is not likely to be a quick “V-shaped” recovery. The Seattle/Tacoma International Airport (SEATAC) has suffered similar traffic loss and has published forecasts for the rest of 2020. As indicated in the graph below, SEATAC is projecting a slow recovery that approximates a 29% traffic reduction thru the end of 2020.

Recognizing that experts predict a vaccine may take 12 to 18 months for development and testing, national trade organizations and experts have offered forecasts that are outlined below:

  • The International Air Transport Association (IATA) estimates $113 billion in airline losses for 2020
  • Major carriers are predicting significant reductions in capacity and lay-offs by October
  • Significant health and safety guidelines will require social distancing in public facilities, health/temperature screening, and increased cleaning/maintenance enhancements.

Airlines face the additional business driver of their existing business model—which requires an average 77% load factor for profitable operations—at a time when social distancing needs to be followed. We all recognize that operational costs related to these changes will place a heavy burden on airlines and the industry.

Looking forward, industry experts are predicting a greater time-period before the industry returns to peak 2019 travel levels—one that far exceeds the impacts of 9/11 and the financial recession of 2008. In the March 2020 edition of Aerospace & Defense, aviation industry expert Dean Donavan wrote that the future market will experience five key impacts:

  1. Peak volumes not regained for three to five years
  2. Pricing recovery will lag volume by one year
  3. Business travel will return first but will have lower volumes long-term—or permanently
  4. Long-haul narrow body aircrafts with improved range and operating efficiencies will change the nature of international travel, driving more point-to-point service and diminishing the “hub and spoke” model dominance
  5. Regional travel impact will result in less business travel, more leisure travel, and an overall decline in traffic.

Given historical industry performance and current projected impacts, it is clear that airports should take a critical look at their current facilities’ condition and capacity, available funding/revenue based on projected performance/traffic demands, and a prioritized capital investment plan to meet requirements.

Toronto Pearson International Airport.

A good best practice can be found in the strategy and experience of the Greater Toronto Airport Authority post-2008 plan that focused on:

  1. Optimizing the utilization and capacity of current infrastructure (Facility) 
  2. Improving processes and flow for passengers, baggage, and aircrafts
  3. Enhancing the overall travel experience.

Recognizing that the industry’s response to 9/11 was primarily focused on security and the 2008 Financial Recession impact was primarily a loss of traffic, COVID-19 adds the major additional issues of health screening, social distancing, and health safety.

How to prepare airports for the future—even with many unknowns

With falling revenue and so many unknowns as we look ahead, we hear these questions frequently: Where should we make investments? What improvements to existing facilities should be made? How do we maintain staff and control costs until the travel peaks of 2019 return?

Firstly, I believe that an asset management approach and strategic master plan update will provide a critical decision-making platform for senior managers who want to understand the potential air traffic impacts for their airport. This strategy is helpful in balancing near-term capital improvement investment strategies together with long-term future visions for their facilities.

To best evaluate current facility condition and capabilities versus likely future demands, our team recommends an asset management/strategic plan update process to help define future projects and investments. Consulting firms like Stantec work with airport staff on this analysis by bringing in experienced leaders from their planning, design, engineering, and program/asset management groups. This supports the process and helps airports develop a strategic review and implementation plan for priority projects. Our team is passionate about ensuring the consultant team and airport staff team work as one integrated project team, increasing effectiveness and efficiency—even while working remotely.

We believe the traveler’s safety and confidence in the new approaches are critical to future airport facility design.

It’s the role of the integrated project team to focus on the following key areas when moving forward with an asset management plan:

1. Confirm current airport conditions and capacities

  • Building conditions should be updated when not current or complete to provide a more accurate status of current fixed assets
  • Assessment should prioritize required investment versus preferred project modifications
  • New technologies should be reviewed as part of the cost/benefit analysis.

2. Develop a model for future passenger traffic demands

  • Evaluate the existing and projected future air carrier environment for both passenger and cargo carriers—there will be lower frequency, lower load factors, and likely airline failures to evaluate in each market 
  • Gauge the consumer sentiment and market response to travel in catchment areas
  • Analyze the impacts on future destinations and possible routing challenges based on carriers serving the market and critical aircrafts
  • Determine an adjusted demand forecast in the local market for passenger travel (both business and leisure), cargo activity, and providers for the next three to five years
  • Adjust demand and capacity requirements as the situation evolves.

3. Develop potential project definitions to meet expected health and facility remodeling requirements

  • New health screening technology for both departing and arriving passengers, associated building renovations and social distancing requirements. Stantec has developed a “Green Light” communications/wayfinding strategy that includes critical information regarding passenger movements, signage, and information. We believe the traveler’s safety and confidence in the new approaches are critical to future airport facility design
  • Facility energy system improvements to capture savings during non-peak use
  • Facility modifications/re-purpose projects to meet future demands
  • Moving forward with high priority projects from current Master Plan where beneficial in short and long term – capture potential construction cost savings/improved phasing options due to low traffic.

Stantec developed this strategic, asset-based planning study from a well-known industry “Gap Analysis” approach platform described in the graph below. The “Gap Analysis” approach is a commonly used methodology in our Program Management practice to quickly identify current asset conditions, compare these conditions or operational capacities to future needs or requirements, and then rank the possible capital improvement investments by priority on a cost/benefit analysis. 

Gap Analysis approach.

After completing the facility assessment and traffic model demand forecast scenarios, the next step is developing a decision-making filter and process to assist senior airport staff with their implementation plan. The plan updates would be generated as an output from a team workshop.

The resulting COVID-19 asset management/strategic planning document should be developed to support informed decision-making going forward. This helps to balance short-term investments with the longer-range vision of the fully developed airport and the future demands of its customers and airlines.

The benefits of an asset management plan

It’s imperative for airports to have a strategic asset management plan and implementation plan as it will provide a holistic approach for the future. The plan will act as a road map and ensure that airports have answers to the tough questions, such as:

  • What are the impacts of the current situation likely to be?
  • What requirements will we face in responding to these impacts?
  • How can we best use our limited capital dollars to meet these requirements?

Approaching the current aviation market challenges from an asset management/strategic plan approach provides management the best opportunity to filter through all of the current financial, operating, health, and environmental issues. And with the backdrop of future investment opportunities, it will help make informed decisions for the next three to five years and beyond.

  • Michael Musgrave

    With more than 35 years of program management experience for complex infrastructure programs, Mike specializes in forming and leading successful program teams and delivering best practices.

    Contact Michael
End of main content
To top