Deserted airports, closed restaurants, cafes, and duty-free shops, with hardly any travelers in sight. Hence, storekeepers, retailers, and operators of gastronomic facilities located within or outside an airport’s airside area, belong to the victims of the corona pandemic, alongside the airlines, airport operators and their many employees. With the difference that little is heard from the retailers concerned because they lack a strong lobbying organization.
It’s almost a ghost town: deserted terminals at airports, shops with closed shutters wherever one looks, bars, cafes and restaurants all without any guests. A disturbing silence has fallen over
the airports, the former trading centers for perfumes and cosmetics, fine clothing, wine and spirits, and hosts of duty-free shops. Andreas Reichert, Managing Director of Allresto GmbH, a company
that runs all gastronomic business at Munich Airport, puts it in a nutshell: “For weeks, the retail business and the catering sector are nearly dead.”
Dire times will last until mid-June, at best
The restrictions were prompted by Covid-19, leading to shutdowns in most countries, imposed by governments in mid-April to prevent the virus from further spreading. Since then, restaurants and bars are closed, as are sports facilities, kindergartens, theaters, and most educational institutions, though a tentative easing of the restrictions has lately begun. At airports however, the first shops are unlikely to open before mid-June, when passenger traffic is expected to tentatively ramp up again.
In order to prevent the imminent bankruptcy of retailers or restaurants, Munich Airport confirmed its intention to CargoForwarder Global to renegotiate the financial conditions with the companies concerned, i.e. license fees, rental costs, levies based on turnover or facility space.
Expenses but no income
All this against the background of the fact that most of the affected companies are groaning under the weight of ongoing expenditures such as energy costs or wage bills despite short time working agreements.
Meanwhile, the non-profit organization Airport Council International (ACI), has addressed policy makers, calling for immediate airport relief measures, including the protection of airport charges and revenues, tax relief, concession fee waivers, the temporary suspension of slot usage requirements, measures to ensure the continuity of air cargo operations, and comprehensive financial relief. Conversely, the ACI Board does not say in its statement what airports are willing to do to relieve their concessionaires from the high financial burden, allowing Duty Free shops, retailers, restaurants, or coffee shops to stay in business.
Partners or milk cows?
Not a single word on that was heard from the ACI headquarters in Montreal. Although help is urgently needed because airports have increasingly developed into shopping centers in recent years, relying more and more on retail and gastronomy as an important source of income often accounting for between 30% and 40% of the airport’s total revenues.
How hard some suppliers are hit is evidenced by Basel, Switzerland-based Dufry, which claims to be the world’s leading travel retailer. Its sales plunged -94.1% year-on-year in April. “The startling fall in April turnover, driven by the combined impact of closed national borders; near or total shutdowns of many airline and airport passenger operations, underlines the extent of the challenge faced not only by the giant of travel retail but also the sector as a whole”, The Moodie Davitt Report, a leading publication of the global travel retail sector, states. How dependent the Swiss company is on airport business is illustrated by this figure: it accounts for 91% of the company’s total revenues.
Still no silver lining on the horizon
As an immediate reaction to the plunge, Dufry has developed an action plan to secure cash generation and safeguard profitability. The scheme considers different scenarios of full-year sales declines ranging from -40% to even -70%. Particularly medium-sized and smaller airport suppliers may be affected even worse. Not a prosperous outlook for the retailers.
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