Greetings:
Six months into the coronavirus pandemic in the U.S., the travel and hospitality sectors continue to be hard hit, including air travel. The pandemic has highlighted the complex interrelationships between the various businesses central to MSP Airport’s success and the need for those entities to work together to ensure MSP is positioned to thrive in an age of fewer flights.
Travel demand reached a low point in April and has grown gradually at MSP and across the country this summer. Currently, we’re seeing passenger levels about 70 percent below those experienced this time last year – a notable improvement from the 95 percent decline in early April, but still below the number of customers airlines and some airport businesses need to generate profits.
MSP is served by about 45 percent fewer aircraft seats this August that in August 2019. Airlines are scheduling 309 aircraft departures per day, on average, the most since the pandemic hit but a fraction of the 560 daily departures a year ago at this time. Airlines are actively serving 145 routes from MSP, with 64 remaining suspended.
These numbers represent the pinnacle of the recovery so far, driven largely by leisure travel. We likely won’t see additional growth until next spring or summer since demand and flight activity traditionally taper off for several months beginning in September. In the past, business travel has helped sustain the industry during the school year, when leisure travel lightens, but airlines and analysts report the fledgling recovery we have seen in leisure travel this summer has yet to ignite in the business sector.
While uncertainty is a hallmark of the pandemic, analysts and airlines agree it will take years for the industry to recover fully. In the interim, the challenge for the Metropolitan Airports Commission (MAC) is to lead a multi-year recovery that includes our many interdependent airport stakeholders. Our recovery strategy must focus not only on our own organization’s needs but also on those of the MSP airport community and the traveling public because our airport system works well for no one if it doesn’t work for all.
It is a strategy with several parts.
First, we are working with airlines and other airport partners to demonstrate that appropriate steps are being taken to help travelers stay healthy during every part of their airport and airline journey. Through our Travel Confidently program, we emphasize robust, frequent cleaning, social distancing, physical shields, face coverings, touchless pre-booked parking, and hand washing and sanitizing as key components of traveling safely.
Second, we are reducing expenses by eliminating non-essential projects and purchases and are maximizing financial relief stemming from the federal CARES Act, which Congress passed in April. The combination of expense reductions and aid are critical to our ability to make debt payments, cover essential costs and move forward with key airport improvements.
Third, from a partnership standpoint, we know that financially sustainable airlines, concessionaires, reliever airport commercial operators and others are critical to the success of one of the nation’s largest airport systems. Our airports cannot thrive without them, so it’s important we find ways to get through these tough times together. The MAC has deferred certain fees for airlines and reliever airport commercial operators and waived or deferred certain fees for MSP concessionaires and auto rental companies. We continue to look at additional ways we can lower our fee structure for airlines in order to remain competitive with other airports as the industry recovers. We are also exploring additional ways to help boost revenues for our award-winning concessions program given the scarcity of passengers.
Fourth, we continue working closely with Minnesota’s corporate community to identify specific air service demand and communicate those opportunities to airlines. The unique Regional Air Service Partnership (RASP), a joint effort with Greater MSP, gives us a competitive advantage over many airports, providing a mechanism through which to gather data on future corporate air service needs – data we can share with airlines to help us gain air service we otherwise might not get. Previously focused on new international service, we would like the RASP to help us regain domestic service as well as airlines begin to decide where to expand routes and flight frequencies next year.
Fifth, we must remain competitive in attracting and retaining a strong airport workforce to be an employer of choice as Twin Cities businesses hamstrung by the pandemic begin to grow again next year. In October, the MAC board plans to vote on an ordinance to phase in a $15 an hour minimum wage at MSP. We will also take action on a policy to expand use of labor peace agreements, which provide stability for workers and employers, reduce the likelihood of costly work stoppages and ensure a continuity of service for our customers and airport partners.
There are many challenges ahead and COVID-19 is far from conquered, but we are creating a solid base that will serve us well as recovery continues and takes root: boosting traveler confidence, reducing cash outflows, strengthening ties with key business partners, working with the corporate community to position MSP well for more air service, and ensuring labor competitiveness and stability.
MSP is a central force in the region’s economy and has been named Best Airport in North America for four years running. With the help of our business and community partners, the traveling public and some of the most service-oriented employees in the business, we aim to keep it that way.
Sincerely,
|
