Terminal change: How airports can rebuild confidence from customers and investors

Airports need to plan for a steady recovery from the COVID-19 crisis, but not necessarily a return to ‘normal’. While the immediate challenge is to encourage customers into the air, the aviation sector must keep its eyes on long-term transformation too.

By Gary Easton, Head of Infrastructure, Europe and Gavin Steele, Global Head of Aviation

Aviation as we knew it has been one of the headline casualties of the COVID-19 crisis. From analysis of viral spread, to political positioning over quarantining, to financial concerns for the travel and tourism sector – and for global engineering and manufacturing jobs, the last six months have underlined the pivotal role the sector plays in our society and economy.

For 2020, the International Air Transport Association (IATA) suggests that global passenger revenues in September were forecast to be 68 percent lower than those in December 2019, and airlines predicted to lose $84 billion in 2020 as a result of revenues dropping some 50 percent.

There have been positive signs – a cautious uptick in flying since the middle of Q2 this year, announcements of rapid airport testing by airports including Heathrow and emergence of a ‘travel bubble’ between Hong Kong and Singapore which will help to encourage flyers back into the air. However, second waves of the virus, local lockdowns and a web of quarantine restrictions continue to challenge the industry as a whole.

With all these areas considered, the aviation industry is bracing itself for a slow return to pre-pandemic levels of demand by 2023 at the earliest.

Ready to board?

At the heart of the challenge is confidence: from customers who are willing to fly and from politicians who need to trust that measures are in place to protect against the virus. IATA analysis in September 2020 suggested that 50 percent of respondents would be confident to return to air travel within the next six to 12 months, with only five percent saying that they would not travel in the near future. However, constantly changing conditions around the virus itself will continue to affect traffic on a weekly and monthly basis.

While the spotlight is often on the airlines, the real crunch point is in our airports. They act as our gateway to travel, setting our expectations around safety and comfort. Again, IATA data shows that many of the barriers sit at this stage in the customer’s journey. Key concerns raised in the organisation’s June survey include safely travelling to the airport, use of facilities when there and proximity to other passengers not just on the plane, but in the terminal.

Going contactless

In response, major hubs across the globe are doing their level best to instil confidence by adapting terminal operations and infrastructure to create safe journeys and places to work. Ahead of many governments, the airport sector quickly recognised the value of face coverings, protective screens and regular sanitation facilities to reassure passengers.

These have been positive steps, but the industry remains fragmented in its response. It is no use to a passenger if one airport has invested in fully-fledged COVID management if the terminal at the other end and the airline in the middle do not meet the same standards. We need to rapidly see the establishment of an end-to-end optimal contactless experience for flyers.

What does an optimal contactless experience look like?

Best practice across international hub airports is coalescing around a series of key measures:

  • On arrival, these include temperature checks, mandatory face coverings, one-way systems and social distancing on inter-terminal transit.
  • Check-in requires self-service boarding pass collection and bag-drop, biometric checkpoints and virtual queues.
  • Departure areas are focusing on app-based boarding, pier-centric food and retail offerings to limit movement and the reorganisation of communal lounges.

Underpinning all of this is across-the-board personal protective equipment for all staff, robotic and ultraviolet cleaning, on-site medical care and – crucially – data collection on passenger movements to evaluate the success of the strategy.

To state the obvious, these steps are expensive when faced with reduced cash flow, but essential for the sector’s survival.

Route planning

The long-term solution lies in identifying a business case for a more flexible operating model – one that guarantees short-term subsistence but looks to long-term and flexible airport terminals.

The silver lining for the industry is that with the right business plan, consideration of long-term regulatory measures and analysis of passenger movements, there is an opportunity for major hubs to gain a competitive advantage in the new era of air travel.

1. Security

The first major investment area many airports are focusing on is security – both physical and invisible. Investment in areas like body-scanning technology were already taking place before the pandemic due to regulatory requirements. Now there is an opportunity to accelerate such investments as they also support greater social distancing and are virtually contactless.

With growing concerns over future epidemiological threats, as well as biohazards which bring risks, heightened security is not just to be a knee-jerk reaction to the virus, but a regulatory benefit and sound investment for the future too.

2. Customer experience and exposure

The second area combines customer experience and exposure to non-airport services. Smoother passenger interactions and frictionless journeys have long been key objectives for the airport sector and many of the contactless requirements for COVID will support them. More challenging will be understanding the impact of trends outside aviation on airport operating models. Most notably this includes retail.

In recent years, airport concessions had acted as a bright spot for a bricks and mortar industry under pressure. Now, as with any other landlord, airports will need to interrogate their relationships with occupiers to understand their long-term exposure and adapt. Increasingly one of the ways this adaptation is occurring is through having ‘click and collect’ shopping and porter services.

3. Transit to and from the airport

The same principles apply to transit to and from the airport as public transport, in particular, feels the strain from falling passenger numbers. In the short-term, the potential resurgence of private cars as a means of transit may provide some financial relief in the form of parking receipts, but also brings longer-term challenges around sustainability. In many cases, the current reduced passenger numbers are enabling car parks to potentially be repurposed as testing centres. However, this is unlikely to be a long-term solution.

4. Achieving net zero

This point neatly frames perhaps the biggest responsibility and opportunity for the sector: achieving net zero. Previous economic downturns have seen capital decisions trump sustainability as a priority, but this time the two are inseparable. Despite the pandemic, we have seen announcements from major airline groups of their net zero commitments through the last six months – including One World’s routemap to achieve net zero emissions by 2050 in September.

The message from politicians and investors to the sector is clear: help us on climate change and we will help you in the recovery.

For the airport sector, the climate emergency needs to remain a fundamental pillar of a post-COVID business plan.

Managing performance

Understanding the interplay between all these factors is fundamental to shaping new business plans but identifying capacity and capability within the wider supply chain will also be crucial for success. The complex relationships in aviation – from design, engineering, manufacturing and construction, to management and operation – are all facing major recalibration of their own in response to COVID-19.

Above all, airports will need to ensure that their investment cases are agile to respond to a dynamic market.

Business planning must be backed by a comprehensive framework for data collection, analysis and evaluation: from passenger numbers and terminal usage patterns; to retail spend; to the costs and scheduling of capital investment. In the new normal, we’ve learnt that change can be swift and disruptive – making visibility on performance more important than ever.

Taking the lead

Of course, this business planning cannot be undertaken in isolation, but airports need to take a central role in the future of the sector – coordinating efforts between airlines, governments and the wider travel industry.

We are already seeing positive signs, including the establishment of working groups within airport operators, collaboration with airlines to identify what a new model will look like and supply chain partnerships between airlines and technology companies, addressing automated cleaning technology. These are the conversations and collaborations that will shape the future of the industry and secure its success – helping airports to build back better and forge a positive future out of the crisis.

For further information contact:

Gary Easton
Director

t: +44 (0) 131 347 3402
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