Travel Payments

Some Airports Freeze Renovations As Fewer Passengers Fly

Some Airports Freeze Renovations

Plans to expand some airports have been put on hold as air transportation has been grounded by the COVID-19 pandemic, The Wall Street Journal reported.

The San Francisco International Airport has postponed its $1 billion terminal renovation. In Florida, the Greater Orlando Aviation Authority has eliminated four new gates as part of its airport expansion. In London’s Heathrow Airport, a third runway is on hold, and in New Zealand, Auckland Airport is suspending plans for a second runway and a new terminal. 

“We don’t need a marble floor,” Holger Blankenstein, executive vice president of Volaris, a low-cost carrier in Mexico, told the WSJ. “Keeping airport fees in check makes it easier for airlines to offer lower fares.” 

For the week ending June 6, the number of travelers screened by the Transportation Security Administration (TSA) was 2.4 million, PYMNTS found. That’s 86 percent lower than the 17 million passengers for the same period in 2019.

However, many airports are reluctant to put projects on hold. They say it would be costly to halt construction and that air travel could rebound by the time some expansions are complete, the newspaper reported.

For example, in Chicago, work on an $8.5 billion renovation of O’Hare International Airport is ongoing. Work continues on a second airport for Sydney, Australia, which is set to open in six years. Frankfurt Airport in Germany is also proceeding with a new terminal. Hong Kong International Airport continues its work on a new runway, while Germany's plans for the construction of a new terminal are unchanged. 

“We are convinced that we will again see long-term growth in air traffic,” Stefan Schulte, executive board chairman of Fraport AG Frankfurt Airport Services Worldwide, the company that operates Frankfurt airport, told investors at its recent shareholder meeting, the newspaper reported. “A new terminal is not built on an outlook of just two or three years, but rather for the decades to come.” 

But some airports are under pressure to reserve budgets for salaries, maintenance and subsidies for struggling retail tenants, the WSJ reported. 

By year’s end, passenger traffic is expected to be off by half, while airport revenue has been forecast to decrease by 56 percent, according to the Airports Council International, the industry’s trade group.

“We think airports will generally wait to assess the stability of the travel market before ramping up capex again,” Parvathy Iyer, an analyst at S&P Global Ratings, told the Journal. “We would be concerned if airports had not already moved to cut or push out capex in this difficult environment.”



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