Anyone who thinks that downtown retailing is having a hard time during the Covid-19 era needs to visit any airport in the U.S. Retail and restaurant concessionaires there are on their knees thanks to forced closures and travel bans.
Losses that started mounting from March are expected to balloon to $3.4 billion by the end of 2021 if no mitigating action is taken according to a newly-published forecast from the Airport Restaurant and Retail Association (ARRA).
Even with extra seat capacity being returned into the American domestic network this summer, the picture is decidedly downbeat. ARRA’s report, called “The Survival and Revival of Airport Shopping and Dining,” says that the businesses it represents “regardless of size will quickly be facing solvency issues.”
The association adds: “The current trajectory… will usher in a wave of permanent restaurant and retail closures that will turn bustling airports once pulsing with energy into ‘ghost towns’ even after travel recovers.”
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The latest scheduled seat data from analyst OAG for the week starting July 13, show that the U.S. market is down 46% versus late January—before coronavirus cases led to a lockdown in Wuhan and other cities in China.
OAG’s chief analyst John Grant said in a blog post: “Last week’s significant capacity increases from both American Airlines and United Airlines could not be repeated for a second week, although American adding a further 200,000 plus seats a week into the market reflects some confidence in future demand. It also places the airline ever closer to taking back the number one position from Southwest Airlines.”
“Flights are not passengers”
Throughout June, Southwest has been the world’s leading airline for scheduled capacity, but American Airlines has been quickly restoring routes. But ARRA rightly points out that “flights are not passengers: traffic still will not recover this year.”
According to Airlines For America, in the week ending July 12, domestic air travel was down by 71% while international—which attracts higher-spending passengers—was down by 90%. Looking at passengers processed by Transportation Security Administration airport checkpoints, daily July traffic had yet to break 800,000 by mid-month. Last year at this time, daily numbers were at the 2.5 million level, so ARRA could be right on its forecast.
Source: Forbes