Mexican Airport Groups Report Slight Uptick in July
- Grupo Aeroportuario del Sureste (ASUR), which runs several airports in Mexico, Colombia, and Puerto Rico, has been buffeted not only by the Covid pandemic but by the bankruptcies of three airlines that operate from its facilities: Latam, Aeromexico, and Avianca. But ASUR noted that although the quarter was grim, the company has “ample liquidity,” helped by funds from the Mexican government, and will be able to spool up when demand starts to recover. ASUR opened several terminals at its Cancun airport in order to accommodate social distancing. This is one measure that the group is using to deal with the pandemic.
- ASUR’s Colombian airports saw the largest collapse in revenues, given the country’s stricter travel ban. Colombian airports contributed only 5% of revenue in the quarter, while Mexico’s contributed 34%. The group’s San Juan, Puerto Rico airport was responsible for more than 60% of the entire group’s Q2 revenue. Speaking of Puerto Rico, the bank Popular said San Juan arrivals were down 67% y/y in June. Hotel occupancy, a good gauge of tourism, was just 4% in April, 23% by mid-June, and 78% for the July 4th weekend. More than 90% of hotel occupants, the bank said, were local tourists. With newly-imposed travel restrictions though, “we are already seeing this positive trend reverse.” Puerto Rican residents by the way, are in fact eligible for Federal Cares Act benefits, including generous supplemental unemployment checks set to expire this month.
- Grupo Aeroportuario del Centro Norte (OMA), which manages 13 airports in Mexico, reported that passenger traffic at its airports began to recover in June. The Mexican government’s program to ease travel regionally benefited the group, but traffic still was down 73% in the first 20 days of July, compared with 2019. For the whole quarter, traffic was down 90%, y/y. Traffic recovery will be led by visiting friends and relatives (VFR) travel, OMA said. The group already has noticed an uptick in VFR travel. Business travel, as elsewhere, is expected to lag.
- Separately, OMA reported progress on the Santa Lucia airport outside Mexico City. The government is redeveloping the former military base as a new commercial airport to relieve congested Mexico City, after the country abandoned a project for a greenfield airport last year. Santa Lucia, Mexico City, and Toluca will operate as a system of three airports, OMA said.
- Grupo Aeroportuario del Pacifico (GAP), which operates 12 airports in Mexico and two in Jamaica, said traffic was down 86% in the quarter. But LCC Volaris is the largest tenant in many of its airports, and GAP said traffic is increasing on the LCC’s visiting friends and relatives-focused network. The data from July are encouraging, GAP executives said on the company’s earnings call. Traffic for the first half of July was down only 60% y/y, which although grim is an improvement. In the meantime, GAP is focused on keeping costs down, even while beefing up cleaning and safety protocols.
U.K. Airports Ask for Government Support
- The U.K.’s airports are losing $188m per day, and are on track to lose $5b this year, an industry group said. The Airport Operators Association (AOA) said traffic at U.K. airports has fallen by as much as “99%,” and is imploring the government to step in with financial assistance. AOA is asking for relief from some taxes and duties, extending payroll support, and suspending the Air Passenger Duty (long on the wish list for airports and airlines operating in the U.K.) until the pandemic eases.
“Airports have done everything in their power to weather the storm and have done so without the specific government support afforded to other sectors,” AOA CEO Karen Dee said. “That our airports lost close to [$2.5b] during the lockdown should serve as a wakeup call to government and lead them to finally grasp the severity of the challenge and threat that the pandemic has posed and continues to pose to the sector.”
- Airports are taking advantage of less-busy times to improve facilities. Although many projects have been pushed back by the pandemic’s effects on airport revenues, some, particularly those that were far along in construction or for which funds have been committed, are continuing. One such project is Pittsburgh International Airport’s microgrid power program. Work began on the project, which is expected to be complete by next summer. When done, the microgrid will generate 20 megawatts of power from natural gas found on site and 3 megawatts from solar. The airport’s current power demand is 14 megawatts per day.