Greetings:
Spring is upon us, and the feeling of renewal it brings is being reflected in the aviation industry and at Minneapolis-St. Paul International Airport (MSP). We have a long way to go to return to pre-pandemic passenger and flight levels, but we are definitely seeing rekindled interest in air travel.
Air Service Demand on the Rise
In March, the number of screened passengers at MSP security checkpoints averaged about 50 percent of pre-pandemic levels. That compares to less than 40 percent in January and a mere 5 percent in April 2020. We expect the upward trend to continue as summer approaches and more people are fully vaccinated and ready to travel.
The average number of daily departing flights is also rising, from a low of 123 in May 2020 to 343 in April 2021. Fifty routes remain suspended compared to 105 in May 2020. Southwest Airlines will begin new year-round service to Austin, TX on June 6, and Alaska Airlines will offer twice-weekly service to Anchorage, AK between June 19 and August 15. Sun Country is adding nine domestic routes in May: Orange County, CA; Houston, TX; Raleigh-Durham, NC; Cincinnati, OH; Hartford, CT; Kalispell-Glacier, MT; Jackson Hole, WY; Indianapolis, IN; and Fairbanks, AK. On the international front, Delta Air Lines will resume service to Mexico City on May 5, followed by service to Reykjavik on May 27. Icelandair plans to resume its service to Reykjavik this summer, when Condor Airlines hopes to relaunch service to Frankfurt.
It’s great to see more people get to a place where they feel safe traveling again. The science behind that confidence was clear from an April 2 notice from the Centers for Disease Control saying that people fully vaccinated with an FDA-authorized vaccine can safely travel within the United States with no need for a COVID test or quarantine unless a traveler’s destination requires it. Masks continue to be required at airports and on aircraft, however, and we strongly encourage social distancing and frequent hand washing. We also continue the robust cleaning regimens introduced a year ago and use of acrylic shields in areas where travelers interact with airport workers. The move toward touchless technologies will continue even after the pandemic ends, as a way of streamlining services and reducing spread of everyday viruses and bacteria.
The trend in positive activity also extends to aircraft owners at our reliever airports. Aircraft landings and takeoffs there were up 10 percent during the first quarter of 2021 compared to the same period in 2020 despite the long period of frigid temperatures in February. That increase equates to nearly 11,000 more aircraft operations for the quarter. Leading the increases were Airlake Airport in Lakeville, up 23 percent, Flying Cloud Airport in Eden Prairie, up 19 percent, and Anoka County-Blaine Airport, up 18 percent. While leisure flyers and flight training are driving much of the increase, business jet operations are also beginning to grow as companies reconnect with clients and staff in other states.
Continued Financial Impacts
While the trajectory is positive, passenger levels remain well below normal at MSP and across the country. That fact continues to put financial pressures on the aviation industry, including airlines, airport operators and airport businesses such as food and retail venue operators and auto rental companies.
Revenue losses for the Metropolitan Airports Commission (MAC) in 2020 compared to 2019 are estimated at more than $221 million. On top of that, our current budget is predicated on the expectation of nearly $94 million more in lost revenues in 2021, and we forecast another $48 million in lost revenues in 2022.
Federal relief aid does not begin to cover all those losses, but it has helped considerably. Most recently, President Biden signed the American Rescue Plan Act into law on March 11. The Act provides $8 billion in relief to U.S. airports and concessionaires. We don’t yet know what the MAC’s allocation of those dollars will be, but we expect somewhere in the range of $125-$135 million. Included in that is an estimated $16 million or so for eligible MSP concessionaires. We won’t have specific dollar numbers until we get more information from the Federal Aviation Administration. Regardless, the MAC has engaged with industry leaders and lawmakers during the pandemic to build support for relief packages not only for airports but also for airlines, airport concessionaires, impacted airport workers and the industry as a whole.
We are very grateful to Senators Klobuchar and Smith, Congresswoman McCollum and other members of Minnesota’s Congressional delegation whose support for the Act and other relief packages has helped us meet our debt obligations and cover certain operating costs. In addition, I also want to thank Gov. Waltz and state lawmakers for continuing to champion issues important to the recovery of Minnesota’s airports and the state’s travel and hospitality industry.
Concessionaires Go the Extra Mile for MSP Travelers
Unlike food and retail venues elsewhere, those in airports are entirely dependent on travelers and airport employees for their customer base. When passenger levels at MSP dropped 95 percent a year ago, airport concessionaires could not drive traffic to their venues through increased advertising or putting products or services on sale. If people weren’t traveling, they didn’t have access to most MSP concessions and couldn’t make purchases from shops and restaurants.
Despite legitimate financial concerns, concessionaires – including disadvantaged enterprises owned by women and minorities -- worked with the MAC and agreed to keep certain venues open to ensure those who did fly had convenient access to food, beverages, goods and services. Their workers showed up every day of the pandemic, serving on the front line to ensure the flying public had a positive airport experience. There has never been a day when there weren’t adequate services available for travelers despite the limited financial return. Today, nearly 60 percent of the concession venues are open, and we are working with operators to bring additional concessions back on-line in phases to ensure we don’t have more concessions open than passenger numbers can support.
Health Safety Remains a Top Concern
The MAC continues to support efforts to test Minnesotans for COVID-19 and to vaccinate them against it. Since November, we have partnered with the Minnesota Department of Health to offer a PCR saliva testing site for COVID-19 at MSP. The site is located pre-security at Terminal 1. We also partnered with Wandertest to provide rapid COVID-19 testing post-security in Terminal 1 for travelers with same-day boarding passes. In addition, the MAC administers a vaccination site for eligible MSP employees. Well over 5,000 airport workers have received vaccinations through the on-site program, which serves front-line workers, pilots, flight crews, federal security screening officers and concession workers in addition to administrative and back-of-house airport employees. Vaccinations provide the quickest, most effective path out of the pandemic and toward a new, healthier normal.
Don’t Wait to Get REAL ID
Remember, the current deadline for having a REAL ID-compliant driver’s license or state identification card is Oct. 1, 2021 – less than six months away. As of March 25, only about 22 percent of Minnesota’s driver’s licenses or IDs were REAL-ID compliant. While there is a push in the aviation industry and elsewhere for the federal deadline to be extended due to the impacts of COVID-19 on people’s ability to obtain new licenses or IDs, at this writing the deadline remains Oct. 1. The Department of Public Safety partnered with the MAC to bring a REAL-ID processing station to MSP last year, so I encourage those of you who don’t have a compliant ID to make an appointment and bring the necessary documents with you so you can become REAL ID-compliant the next time you fly out of MSP. Once the deadline for REAL-ID passes, people will not be able to fly without either a compliant ID or a valid passport, so I advise getting yours as soon as possible so you don’t get caught in the rush as Oct. 1 nears and risk being unable to fly.
Welcome, New MAC Commissioners
In January, Governor Walz appointed two new members to the MAC board, both of whom bring significant expertise and important perspective to the organization.
James Lawrence was appointed to represent MAC District C, which stretches from Bloomington on the south up to the southern border of Brooklyn Park on the north. Commissioner Lawrence has tremendous experience in finance and investment. He is chairman of Lake Harriet Capital LLC, a private investment firm, and previously served as chairman and CEO of Rothschild North America. Prior to Rothschild, Mr. Lawrence was CFO of Unilever, and he served as executive director on the boards of Unilever NV and Unilever PLC.
Timothy Baylor was appointed to MAC District D in Minneapolis. He is the founder and CEO of the JADT Companies. He created JADT Development Group, LLC in 1985 and JADT Food Group, LLC in 1997. He has led several development projects in the Minneapolis area, including land, retail, commercial, mixed-use and luxury housing projects. As a former Minneapolis Planning Commissioner and former real estate representative for the McDonald’s Corporation, Commissioner Baylor has a diverse and varied experience in the multifaceted real estate development process.
In addition, Gov. Walz reappointed three commissioners: James Deal, representing MAC District E; Donald Monaco, representing Greater Minnesota; and Richard Ginsberg, representing District G.
Congratulations to all five commissioners.
I hope you have an opportunity soon to get your vaccinations, bring your luggage out of storage and get back in the air. While there’s no place like home, after spending so much time there this past year it feels great to get away for a bit to reconnect with friends and loved ones or explore some of the sites on your bucket list.
All the best,
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