U.S. airports and retail businesses clustered inside terminals are reporting dramatic revenue declines that threaten their economic viability, according to an airport industry report issued Tuesday.
U.S. airports lost an estimated $203 million in revenue during the weeks following Sept. 11 and risk losing $1.84 billion in the next 12 months, according to the Washington-based Airports Council International-North America.
The total economic effect at U.S. airports could hit $3 billion due to increased security expenses and cuts in federal funding due to fewer passengers, according to the ACI-NA. And, when coupled with a looming insurance crisis, some airports "may be forced to shut down critical operations," ACI-NA President David Z. Plavin said Tuesday.
The airport sector's financial woes are driven in part by reduced revenue from landing fees because airlines have cut schedules and announced layoffs totaling 100,000 employees. But airports are also reporting a significant drop in payments from parking lot operators, car rental counters and thousands of restaurants, retail shops, bars and other storefronts inside terminals.
Concessions operators could lose $850 million in revenue during the coming year, according to the ACI-NA, which surveyed airport operators Paradies Shops, HMS Host Corp. and CA One Services Inc. Concessionaires are "in the process" of laying off 9,600 employees, or a third of their work force, according to the airports council.
Storefronts in terminals are suffering a double hit. The number of passengers boarding flights is plunging, and those dropping off or picking up passengers are unable to enter newly restricted terminal space where restaurant and retail outlets are clustered.
Atlanta-based Paradies Shops, a closely held company that operates 300 shops at 57 airports, said business picked up slightly in recent days, but that overall sales remain down 35% to 40% compared with the first week in September.
"We're going to do what it takes to survive," Paradies President Dick Dickson said Tuesday. "But if you tell me this [concessions] business is going to remain down 40% through to the end of the year, we'll all probably be out of business."
Airports on Tuesday joined the growing line of travel and tourism businesses lobbying in Washington for federal assistance in the wake of the terrorist attacks.
