HIGHFILL -- Airport officials have watched a disaster unfold over the past two months as passenger traffic dropped 95%. They're looking for ways to reassure the flying public and to survive financially.
"We mirror almost perfectly with what the national numbers are," said Aaron Burkes, executive director at the Northwest Arkansas National Airport. "We read lots of articles about other airports, and it's the same thing. Most every airport was down about 50% in March, and most every airport is expecting to be down about 95% in April."
Flying into the future
Airlines are looking at what it will take to make fliers feel safe in the confined space of airplanes and get passengers comfortable flying again. Airlines have increased sanitation procedures, changed boarding protocols and are giving passengers more room to distance themselves from others on flights. Here’s a look at some of the things three major carriers at XNA are doing:
• American: As of May 13, all passengers on all flights must wear face coverings. Flight attendants have been required to wear masks since May 1. The airline will distribute face masks and sanitizing wipes to customers. Young passengers and those with conditions that prevent them from wearing a face covering will be exempt from the requirement. Seats are being reassigned to create more space and middle seats will only be used when necessary.
• Delta: As of May 4, Delta began requiring all passengers to wear face coverings at all points throughout their journey. Delta employees will undergo temperature checks and must also wear masks when within 6 feet of others. Supplies will be available for customers who need them and passengers unable to keep a face covering in place, including children, are exempt. Delta is also reducing the total number of passengers on each flight and blocking middle seats. The airline has also changed its boarding process to load the plane row by row from back to front.
• United: As of May 4, all passengers must wear a facial covering on United flights; customer service agents will be able to provide them if passengers don’t have one. Customers who have a medical condition that prevents them from wearing a face covering and small children will not be required to wear masks. Through at least the end of May, United is limiting seat selections in all cabins. Fliers won’t be able to select middle seats or seats next to each other and seats will be alternated to maintain a safe distance across aisles. The airline has also moved to prepackaged snacks and sealed beverage options.
Source: NWA Democrat-Gazette
The Northwest National Airport was coming off a record year with 2019 passengers up 17% over 2018, which far exceeded projections and expectations. Another record year was eagerly anticipated.
"January and February, we were up solidly this year over last year's great numbers," Burkes said. "Then, that first week of March, that's when everything just kind of fell off a cliff. It happened very quickly. I think we feared what was coming, but I don't think any of us anticipated we'd be down 95%."
Tim O'Donnell, airport chief financial officer, said there was an inkling when the coronavirus was spreading and President Donald Trump issued travel restrictions, first for China then for Europe in late January and February.
"Obviously, we've got a little bit of travel there, but that started giving people an idea of what might be coming here," O'Donnell said. "And then, it just started snowballing."
About 20% of XNA traffic last year involved overseas travel.
Airport officials braced for impact once travel restrictions and shelter-in-place orders took effect around the country, and people stopped flying because of the real or perceived risk.
"If I was to say what shocked me most, it was probably the speed at which it happened, just over the course of a couple of weeks air travel dropped 90 to 95%," Burkes said. "Anything that happens in business, where you have to adjust your model a little bit, typically it's an evolution, it's just a tweaking at the margins. It's not wholesale, complete devastation to your business."
Hitting rock bottom
XNA administrators get passenger numbers from the airlines monthly and daily numbers from the federal Transportation Safety Administration of people passing through security. Those numbers differ slightly because flight crews and employees also pass through security checkpoints.
"We hit a low of 80 people going through the checkpoint in one day," Burkes said. "We're back up in the 120 range. One day last week, I think we had 180, which was actually a big number comparatively. But, normally we're 2,000 to 3,000 people a day, depending on the day of the week if you look back at 2019."
O'Donnell added when flight crews are subtracted, there are fewer than 50 passengers on an 80-person day. In late March, some flights left with fewer than a dozen passengers and one left empty.
"It's bizarre. You don't expect travel to fall off this dramatically," Burkes said. "Even if you look at 9/11, post-9/11, I think traffic was down 40% or something the next month, and it was off for a while. It took a little while to rebound. But, there's almost nothing that you could foresee that would cause traffic to drop off this dramatically."
XNA went from 329 flights in the last week of February to 19 a few weeks later, according to the U.S. Department of Transportation data. The airport averaged 302 flights a week in 2019.
American Airlines, the largest carrier at the airport, went from 167 flights a week in late February to five. United dropped from 96 flights a week to five, and Delta plunged from 55 to five. Allegiant cut flights from eight to three, and Frontier went from three to one, according to the federal Department of Transportation data.
Passenger traffic plunged even deeper at Bill and Hillary Clinton National Airport in Little Rock in March. The state's largest airport saw a 53% drop from March 2019, according to airport officials. The airport was seeing no more than two dozen daily departures in March, down from the 41 on Feb. 28.
The final April passenger numbers at Little Rock weren't available yet; they're expected to reflect an even steeper fall, down about 95% from a year ago, according to preliminary TSA screening numbers.
Clinton National has more leisure travel while XNA caters more to the business traveler.
Burkes said XNA officials talked about possible adversities like the price of oil and 9/11-type events when working on 2020 projections.
"We didn't list a virus in there, but we knew there's always uncertainty," Burkes said. "This is truly a worst-case scenario for the airline industry."
O'Donnell said, early on in the pandemic, industry insiders were expecting the drop in those flying to be something similar to post-9/11.
"Obviously, there was a significant loss of life from 9/11 on the one day," O'Donnell said. "But, I think it's very fair to say this is, from an air travel perspective, significantly worse going forward, in terms of numbers."
Bouncing back
O'Donnell said enplanements are creeping up.
"There are signs of life. We're seeing a few more people traveling. Anecdotally, we're hearing of people who are hopping on planes again because business is starting," O'Donnell said. "People are very nervous and wearing masks and all of that, but there is some movement."
The airport authority board last month voted to amend agreements with some tenants including airlines, rental car companies, and food and beverage providers. American, Delta and United will have their rates and charges for April, May and June delayed until the first quarter of 2021. Food and beverage providers have been allowed to reduce staff and hours. Rental car providers have been allowed to use a passenger facility fund to cover their rent.
The Clinton National Airport is also providing some tenants financial relief, but none to the airlines for now.
Jeni Wolgast, manager at Hertz Car Rental in the XNA terminal, said she was shocked at the speed with which traffic, and customers, dried up.
"We've had about a 95% drop, kind of like the airport," Wolgast said. "This is a business airport; we still get people from the outside and a few of the fly-ins. We've had some medical personnel that have flown in and rented cars. It's keeping us kind of going. We're here."
Wolgast said that, during the downturn, her location has been sending cars to other Hertz locations in the region.
She's hopeful that business will improve soon.
"I'm expecting it to pick up probably a little bit in July, but maybe not full force until August or September," Wolgast said. "June looks a little bit bleak yet, but it kind of depends on how the curve's going. We're all just waiting."
Of XNA's big three, American reported losing $2.2 billion in the first quarter of 2020. United reported a $1.7 billion loss, and Delta reported a $534 million loss.
Federal officials revised the rules May 6 for minimum domestic flying levels, which lets airlines cut some routes by as much as 90% through September and eliminate others altogether to avoid flying nearly empty planes.
"This is not just affecting airport revenue or airlines. It's also affecting all the rental car operators, our food and beverage folks; pretty much anybody that relies on air traffic for business at the airport is experiencing a pretty painful adjustment to their revenues," Andrew Branch, chief business development officer, told the board in early April.
O'Donnell told the board in late March airport revenue could take a $10 million hit this year, or more, depending on how long the economic decline continues. Airport revenue comes from parking, rental cars, concession agreements and landing fees. XNA also receives money through the federal Transportation Department and the state. In 2019, XNA had operating revenue of $20.8 million.
Northwest National received an $8.2 million grant from the Federal Aviation Administration in mid-April as part of the federal Coronavirus Aid, Relief, and Economic Security Act. The airport plans to use the money for operations, including payroll, utilities, maintenance and debt service.
"We had pretty good reserves going into this because we have capital projects in the planning stages, and we're moving forward with those so we had more liquidity than you would normally have," Burkes said. "And this additional $8.2 million, it does give us several more months of covering the revenue we would have had if things had been as we projected last year."
XNA had $29.3 million in unrestricted cash reserves available at the end of January, Burkes said.
Airport officials have also formed a travel safety workgroup, which includes representatives of major corporations in the area, the University of Arkansas, Mercy Health, the Northwest Arkansas Council and the Transportation Safety Administration.
"I think we'll be able to come up with some ideas and implement those very quickly to make people feel as comfortable as they can possibly feel flying out of or into XNA," Burkes said.
A different approach
Burkes said the airport's business model differs from other industries in several important ways.
"Most businesses, they want to get back and make as much money as they can. That's not really our mission," he said. "Our mission is to promote economic development and our quality of life in Northwest Arkansas, and I don't think we do that by getting people on airplanes before they're ready."
Burkes said he and O'Donnell are developing a model of what things look like on the revenue side and what can be adjusted on the expense side to present to the board May 20.
"It seems like forever we've been in this, but it's really been less than two months. And I think it's been absolutely as bad as anybody could have forecast during these last few months, and I think the coming months are going to be very bad, too," Burkes said.
O'Donnell said it's complicated trying to model consumer behavior a year out without knowing whether there will be a vaccine or cure available for covid-19 or what the unemployment rate might be.
"People are looking out 30 to 60 days; there's not a lot of them really thinking about where they're going to travel next year," O'Donnell said. "It makes it really interesting as to how this thing shakes out."
Kelly Sayer and her husband, Scott, were frequent fliers for both business and pleasure out of XNA before the pandemic arrived, but Sayer said by phone Thursday she won't fly now because work brings her into close contact with a lot of elderly people who are vulnerable and could be harmed or killed by the virus.
Sayer said she knows airlines are doing everything they can to make flying safe, but there are just too many variables right now.
Editorial on 05/20/2020