Revenue pressures continue for North American Airports and Airlines
THE Covid recovery period in the US and Canada will intensify revenue and cost pressures on North American airports and airlines, reports London's Air Cargo News
THE Covid recovery period in the US and Canada will intensify revenue and cost pressures on North American airports and airlines, reports London's Air Cargo News.
The pandemic continues to affect the aviation sector and the global economy. Passenger traffic fell by 95 per cent during the first two months of the pandemic and has only recovered to roughly 65 per cent to 75 per cent reduction level compared with the same period in the prior year.
Fitch projects traffic volumes are remaining 75 per cent lower this quarter and remain 60 per cent lower for the fourth quarter.
'A new normal in air travel has materialised and will persist over the next several years, exacerbated in part by general decline in demand coupled with risks to continued use of imposed travel restrictions at national and state levels,' said Fitch senior director Seth Lehman.
'Domestic and leisure-oriented travel are best positioned to demonstrate earlier recovery while international and business-related travel will likely take far longer,' said Mr Lehman.
'For the airlines, the prolonged recovery will at least push a return to more normalised credit metrics beyond 2021, and in some cases will have negative rating impacts, though near-term risks have been mitigated by large amounts of new liquidity that have been raised to date,' said fellow Fitch senior director Joe Rohlena.
Airport revenues are continuing to be dependent on revenue streams generated from terminal concessions, parking, and rental car activities.
North American airlines raising capital since the onset of the pandemic is also helping the pandemic. Risks for both airports and airlines will continue to increase as difficult conditions remain.