Advisory Bulletins

The impact of COVID-19 on the airport business—and the path to recovery

November 1, 2021

Pandemic resurgence and increasing uncertainty are delaying recovery

Montreal, 1 November 2021 – Airports Council International (ACI) World has published its eighth quarterly assessment analyzing the economic impact of the COVID-19 pandemic, its effects on the global airport business, and the path to recovery.

The World Health Organization (WHO) declared the COVID-19 outbreak a global pandemic more than 18 months ago. Since then, daily life across the globe has changed. Practically all aspects of economic and social activity were immediately disrupted by the pandemic—and many aspects still are disrupted. By November 2021, around five million people throughout the world had died as a result of COVID-19 infection and at least 240 million people had been infected.

Along with the human tragedy, the crisis has also resulted in dramatic damage to the global economy, trade, and mobility. The International Monetary Fund (IMF) recently estimated that the pandemic reduced the world’s economic output by 3.1% in 2020¹. However, the IMF also highlighted that despite the resurgence of the pandemic in 2021, the global economic recovery is continuing. The global economy is now projected to grow 5.9% in 2021—0.1% less than the IMF forecast in July 2021—and another 4.9% in 2022. The downward revision for 2021 reflects a downgrade of the output from advanced economies—partly as a result of supply disruptions—and also of the output from low-income developing countries, largely because of worsening underlying forces produced by the pandemic.

The air transport ecosystem and the airport sector in particular are again among the industries most affected by the COVID-19 health crisis, due to the industry’s global nature. From the outset, nobody could have predicted the unprecedented impact of the COVID-19 pandemic on the air transport industry, because it combined major economic and health crises alike. The second week of March 2020 came as a game-changer, when an overwhelming majority of national governments implemented strict confinement measures which eventually resulted in what the IMF later characterized as the “Great Lockdown”—the worst economic downturn since the Great Depression of the 1920s. The outbreak resulted in fundamental shifts in all the demand and supply parameters for air transportation and airport infrastructure and services.

Since the first COVID-19 vaccine dose was administered in late 2020, more than 6.5 billion doses have been administered in 184 countries. While this is great news, it is far from the whole story. High-income countries have administered more than 33 times more vaccine doses than have low-income countries. Low vaccination rates mean that emerging and developing nations are more exposed to the virus and its variants. The existence of unvaccinated and not fully vaccinated populations also increases the risk of other variants emerging, which could undermine the progress made until now. The good news is that the pace of vaccination has accelerated in core emerging markets in the past few months. However, those countries continue to fall well short of the commonly recognized threshold for herd immunity and vaccination rates vary widely among subregions.

Even with massive vaccination efforts, the global travel market remains significantly below pre-COVID-19 levels. This is largely due to the continued travel restrictions imposed by state governments. Despite this, a number of major markets are gradually reopening of their borders to vaccinated travellers. A notable example of this is the United States, which plans to ease restrictions in early November 2021. The progressive reopening of borders in more and more countries has again sparked optimism that this trend could galvanize the recovery of the industry into next year.

In this overall context, this document seeks to highlight some key figures in terms of the impacts of the COVID-19 pandemic on airport traffic and revenues and explore pathways to recovery.

1. COVID-19’s effect on airport traffic: weaker momentum in 2021 and delayed recovery

The devastating and unprecedented impacts of the global coronavirus pandemic and the subsequent travel restrictions on the airport industry and the entire air transport ecosystem are now well-known. After a decade of consistent and robust growth in global passenger traffic, the COVID-19 pandemic virtually halted activity at airports around the world in the second quarter of 2020. As a result, the total number of passengers for the year fell sharply from 2019, to a level the world’s airports had not seen since 1997.

That said, the vaccination effort now well underway in many countries suggests there may be positive signs of gradual reopening in countries that experience high vaccination rates. While the first quarter of 2021 showed little sign of improvement compared to the fourth quarter of 2020, the hope was that the second quarter would emerge as a pivotal point and represent the start of a real recovery. Unfortunately, this did not happen, despite increasing numbers of people being vaccinated and some international travel restrictions gradually being eased. The momentum of the Asia-Pacific region, fuelled by the rapid recovery of the Chinese domestic passenger market, was severely dampened in the third quarter of 2021 by a resurgence of COVID-19 and the re-establishment of travel restrictions in the region.

COVID-19 remains an existential crisis for airports, airlines and their commercial partners, and the aviation industry needs support and practical policy decisions from governments. ACI World is cautiously optimistic and advocates the importance of a pragmatic and risk-based approach to managing the sustainable recovery of the aviation industry as it prepares for a return of air traffic demand. Government action to promote safe travel—including a coordinated and risk-based approach to testing and vaccination—is critical, rather than governments enforcing full-scale restrictions and blanket measures.

The speed of the recovery continues to depend substantially on several stakeholders and the level of coordination pursued by national governments worldwide. While the global travel market is still mostly depressed, more and more countries are moving towards the gradual reopening of their borders to vaccinated travelers.

In its latest assessment, the International Air Transport Association (IATA) noted that there are regional differences in terms connectivity across route corridors. While intra-Asia traffic remains flat in terms of traffic numbers due to ongoing border closures, the North-America – Latin American route corridor has showed great strength and is approaching pre-COVID numbers. This a testament to the pent-up demand for air transport that is observed and the willingness to travel when border restrictions are eased. The Intra-European market has also showed some strength in the last months with the introduction of harmonized EU digital health certificates. Finally, the North Atlantic routes will also see a surge with the easing of travel restrictions and increased bookings.

Despite a delayed recovery as compared to earlier forecasts, the trend of gradual reopening brings a renewed optimism that air travel could see an uptick in 2022, moving the industry closer to its recovery.

In this context, using the latest data from its collections of monthly traffic statistics in 2021, ACI World has produced new estimates of the impact of the crisis on passenger traffic.

2021 developments

The lasting adverse impact of the COVID-19 crisis is forecast to remove an additional 5.2 billion passengers by year-end 2021 compared to the projected baseline (the pre-COVID-19 forecast for 2021), representing a loss of 53.2% of global passenger traffic (see Table 1). The COVID-19 outbreak reduced the number of passengers at the world’s airports by an additional 5.9 billion in 2020.

Global passenger traffic in 2021 is expected to reach only half of what it was in 2019, with traffic for 2021 totalling only 4.6 billion of the 9.2 billion passengers served two years ago.

The Middle East is forecast to remain the most impacted region in 2021, losing 69.3% of its passenger traffic for the year compared to the projected baseline. This is due to the region’s high dependence on international travel and connectivity, both of which are recovering much more slowly than domestic travel.

Driven by the combination of a fast-recovering US domestic market and a high overall vaccination rate, North America’s performance has improved significantly in 2021 following a weak first quarter. As a result, the region is forecast to outperform other regions to end the year with its traffic down 36.6% compared to the projected baseline (or down 32.8% compared to the 2019 level). This adjusted total represents a 6.9% increase compared to our March 2021 forecast.

Following an early beginning of recovery, Asia-Pacific experienced a slower than expected first quarter in 2021 due to restrictions imposed around the Chinese New Year festivity, in order to limit the spread of the virus. In addition, domestic traffic in the region experienced a sharp decline in the third quarter after travel restrictions were reinstated in some countries. The region is expected to end the year with an estimated traffic loss of 55.9% compared to the projected baseline, a loss 10% greater than projected in July.

International passenger traffic remained weak in the first half of 2021, and signs pointing toward a surge in air travel demand for the second half of the year did not materialize despite an increasing number of people getting vaccinated. International passenger traffic volume is expected to lag significantly behind domestic traffic recovery in 2021 and is forecast to total only 1.47 billion passengers for the year, or 38.7% of the 2019 level. This is a 1.9% decrease from our July 2021 assessment (see Chart 4).

Domestic passenger traffic is recovering faster than international traffic. Major domestic markets began recovering in 2020 and the pace of recovery accelerated in 2021—especially in the US, by far the world’s largest domestic market. However, China’s domestic market has seen some setbacks as a result of the re-establishment of travel restrictions. Globally, domestic traffic will continue to increase in 2021 to reach more than 3.1 billion passengers by the end of the year, a level corresponding to 58.5% of that achieved in 2019 (see Chart 4).

2022 projections

In 2022, the COVID-19 crisis is expected to remove more than 3.6 billion passengers during the year compared to the projected baseline, representing a 35.5% decline in global passenger traffic (see Table 1). Compared to the 2019 level, this would represent a 28.3% decrease.

The Middle East will remain the most impacted region in 2022 due to its dependence on international and transit passengers. Traffic in the Middle East in 2022 is expected to be 51.2% lower than that projected for the baseline.

North America will continue to outperform other regions in 2022, reaching more than 85% of its 2019 level by year-end. Passenger traffic in the region for 2022 is forecast to be 21.4% lower than that projected for the baseline.

Asia-Pacific passenger traffic in 2022 is expected to be 41.5% lower than that of the projected baseline. Although Asia-Pacific was the first region affected by the pandemic, it embarked on recovery earlier and faster than any other region, mainly because of a quick recovery in China’s sizable domestic market. However, the region’s traffic momentum was weakened in the second half of 2021 by the resurgence of the pandemic—resulting in Asia-Pacific achieving only the fourth-best performance of all regions. Because of the sheer size of Asia-Pacific’s market, the region is expected to record the highest traffic loss among all regions in 2022, seeing 1.59 billion fewer passengers than the projected baseline number.

Domestic passenger traffic volume was helped by the early recovery of major domestic markets such as those of China and Russia. Despite some setbacks in China, global domestic traffic volume will continue to recover faster than international passenger traffic. However, it will total only 4.2 billion passengers in 2022, or 78.5% of 2019 volume (see Chart 4).

International passenger traffic will remain weaker than domestic passenger traffic in 2022 but some improvements are expected. International passenger volume is forecast to be slightly more than 2.3 billion passengers for the year, corresponding to 62.2% of 2019 volume (see Chart 4).

Find more details, and regional breakdowns, in Table 1, Table 2, Chart 1, and Chart 2 below.

Table 1: The impact of the COVID-19 crisis on quarterly passenger traffic by region (2020, 2021, 2022, rounded to nearest million passengers)

*The projected baseline (pre-COVID-19) scenario is based on a standard time-series forecast generated using the most up-to-date and complete historical data to December 2019. It also makes use of an adjusted World Airport Traffic Forecasts (WATF) 2019–2040 and considers the latest insights provided by ACI Regional offices and other inputs.
**Estimated passenger traffic volumes are based on a broad range of inputs provided by ACI Regional offices and industry experts.

Source: ACI World

Table 2: The impact of the COVID-19 crisis on quarterly passenger traffic by region (2020, 2021, 2022, rounded to nearest million passengers, percentage compared to 2019)

*Estimated passenger traffic volumes are based on a broad range of inputs provided by ACI Regional offices and industry experts.

Source: ACI World

Chart 1: Projected global quarterly passenger losses due to the COVID-19 crisis (2019–2022, in billions of passengers)

Source: ACI World

Chart 2: Quarterly global passenger traffic projection compared to pre-COVID-19 forecast (2019–2022, in billions of passengers)

Source: ACI World

2. COVID-19’s effect on airport revenues: unprecedented financial challenges will persist well into 2022

Airports and the aviation sector serve as economic engines. The industry’s global economic impact—direct, indirect, induced, and catalytic—contributes trillions of dollars to the total world gross domestic product, supports millions of jobs, and fosters sustainable development. Furthermore, the aviation sector will play a critical role in the economic recovery following the COVID-19 pandemic.

Airports play a pivotal role in this ecosystem. The economic value driven by airports cannot be understated when it comes to facilitating business and leisure travel, trade, and the subsequent GDP, jobs, taxes, and associated social benefits.

Air traffic is the lifeblood of the airport business. Practically all aeronautical revenues are a direct function of traffic and include passenger-related charges and aircraft-related charges levied from aircraft operators.

As traffic declines, airports’ ability to collect those charges decreases proportionally². As airports have little flexibility in operating expenditures but also have capital costs that are largely fixed, the current crisis represents an unprecedented challenge for the airport industry’s financial viability. The world’s airports are expected to lose more than US$310 billion by the end of 2022 as a result of the COVID-19 crisis.

2021 developments

The impact of the COVID-19 crisis continues to affect airport revenues severely in 2021. It is now estimated that, globally, airports will lose more than US$111 billion in revenues this year, US$3 billion more than we projected in our previous assessment of July 2021. The crisis is expected to cut by more than half (57.2%) airport revenue expectations for 2021 compared to the projected baseline (the pre-COVID-19 revenue forecast). Compared to 2019, airport revenues will be reduced by 54.1%. See Tables 3 and 4.

This new bulletin worsens the expected annual financial performance of the world’s airports compared with the projection we published in July 2021, especially for the fourth quarter of the year. While revenue in the first quarter of 2021 was less than in the final quarter of 2020, we still expect each quarter of 2021 to show an improvement compared to the previous one. Compared to the projected baseline, the quarterly revenue shortfall is projected to improve from a 69.9% decline in the first quarter to a 47.4% decrease in the fourth quarter.

The Middle East and Europe will remain the regions most affected in relative terms, respectively seeing 69.3% and 61.5% declines in 2021 compared to the projected baseline. Europe, the most impacted region in absolute terms, is expected to lose more than US$39 billion in revenues by year-end 2021 compared to the projected baseline.

North America and Latin America-Caribbean are expected to recover quicker than the other regions and in 2021 will reach more than half of their projected baseline revenues for the year. These regions are forecast respectively to see 49.2% and 46.7% decreases in 2021 compared to the projected baseline.

Asia-Pacific’s estimated revenues for 2021 are reduced in this bulletin compared to the bulletin we published in July. This is as a result of setbacks in some key markets—such as China’s domestic passenger market—caused by new travel restrictions arising later in the year. Asia-Pacific’s revenues are expected to be down 55.9%—that is, US$34.5 billion—in 2021 compared to the projected baseline.

2022 projections

Before the COVID-19 outbreak, the airport industry was expected to generate more than US$200 billion in revenues in 2022. However, the impacts of the COVID-19 crisis on airport revenues will continue in 2022, reducing them by an additional US$78.6 billion, or 39%, compared to the projected baseline. As is expected in 2021, each quarter of 2022 will see an improvement over the previous one, in relative terms. See Tables 3 and 4.

All regions except the Middle East are expected to reach more than half of their projected baseline revenues for 2022. The Middle East will remain the most impacted region, with its revenues for 2022 falling 51.2% short ofthe projected baseline. In absolute terms, Asia-Pacific and Europe will record the largest losses among the regions in 2022, ceding US$26.7 billion and US$24.3 billion respectively—despite a significant recovery by Europe during the year.

North America and Latin America-Caribbean are expected to continue to perform better than any other region in 2022. They are forecast respectively to see 35.5% and 30.4% shortfalls compared to the projected baseline.

Find more details, and regional breakdowns, in Table 3 and Table 4 below.

Table 3: Impact of the COVID-19 crisis on quarterly revenues* by region (2020, 2021, 2022, rounded to nearest million USD)

* Revenues are estimated assuming constant quarterly airport revenues on a per-passenger basis and are based on ACI’s 2020 Airport Key Performance Indicators, as well as input from ACI Regional offices. Financial figures are rounded for ease of reading. Percentages of change use exact figures. Estimates are updated between each release as more information and data become available.
**The projected baseline (pre-COVID-19) scenario is based on a standard time-series forecast generated using the most up-to-date and complete historical data to December 2019. It also makes use of an adjusted World Airport Traffic Forecasts (WATF) 2019–2040 and considers the latest insights provided by ACI Regional offices and other inputs.
*** Estimated passenger traffic volumes based on a broad range of inputs provided by ACI Regional offices and industry experts.

Source: ACI World

Table 4: Impact of the COVID-19 crisis on quarterly revenues* by region (2020, 2021, 2022, rounded to nearest US$ million, percentage change compared to 2019)

* Revenues are estimated assuming constant quarterly airport revenues on a per-passenger basis and are based on ACI’s 2021 Airport Key Performance Indicators, as well as input from ACI Regional offices. Financial figures are rounded for ease of reading. Percentages of change use exact figures.
** Estimated passenger traffic volumes are based on a broad range of inputs provided by ACI Regional offices and industry experts.

Source: ACI World

3. The road to recovery

Much uncertainty still surrounds the recovery of the aviation industry. Projecting the path to recovery at this point is still an exercise requiring prudence. Although the largest vaccination campaign in history is well underway, a large proportion of the world’s population—mainly in emerging and developing countries—remains unvaccinated. While positive signs of recovery can be seen, recovery could be erased by the emergence of a new variant of the COVID-19 virus that make vaccines ineffective—returning the industry, and the world, back to square one.

Despite the downside risks which remained, at the beginning of 2021 many industry experts forecast a surge in travel in the second half of the year—some even referring to a potential “post-war-like surge,” or boom in travel. But we know now that the expected surge in the third and fourth quarters of 2021 will not materialize fully, partly because of delays in lifting safety measures and travel restrictions resulting from the appearance of new infection clusters and threats from the spread of variants such as the Delta variant.

However, there is no doubt that travellers and industry stakeholders alike are eager to resume travelling. Many consumer-sentiment surveys conducted in early 2021 indicated consumers were experiencing “vacation deprivation.” Combined with an upsurge in confidence in air travel provided by increased vaccination rates and safety measures, this impulse would boost the propensity for air travel and would help fuel the industry’s recovery.

We employed three scenarios in assessing the potential recovery trajectory, using the following assumptions.

World Airport Traffic Forecasts (WATF) 2020–2040:

Developed in December 2020 and published in January 2021, the WATF 2020–2040 assumed that effective vaccines would be widely distributed in the second half of 2021. It also assumed that consumer confidence in resuming flying would grow, and that a reasonable airline fleet recovery would take place.
This scenario remains achievable for 2023 and beyond, but it is contingent on the ability of governments to contain the spread of new variants of the virus and on global distribution of vaccines occurring.

Current projection:

This scenario considers effective vaccine distribution in 2021 and strong adoption of COVID-19 vaccines in major markets.
It assumes effective vaccine distribution and strong adoption of vaccines in emerging and developing countries in 2022.
This projection also assumes growing consumer confidence in resuming flying in 2021 and a reasonable airline fleet recovery.
It posits that additional infection waves are possible in the second half of 2021 and in 2022 but they would be contained and limited to specific regions.

Pessimistic scenario:

This scenario considers weaker vaccine distribution in 2021 and well into 2022, especially in many emerging and developing countries with limited vaccine supply.
It assumes that fear of travelling is still present among passengers, that economic weakness is prolonged, and that airline fleet recovery is slow.
It posits that additional waves of infections are likely and could spread to multiple regions, and difficulties would exist in containing the spread of new variants.

Under those assumptions, ACI World forecasts the following, regarding the recovery of airport passenger traffic:

Under the current projection and taking into account the slower than expected fourth quarter of 2021, global passenger traffic is expected to recover to 2019 levels in early 2024. The overall recovery will mainly be driven by the recovery of domestic passenger traffic but will be hampered by a slower recovery in international travel (globally, domestic traffic accounted for 58% of total passenger traffic in 2019). The WATF 2020–2040 remains the most likely scenario as of 2024 if new variants of the virus are contained effectively and the vaccination rate increases rapidly—especially in emerging and developing countries—so that a significant proportion of the world’s population is vaccinated by the end of 2022.

Global domestic passenger traffic is still expected to reach 2019 levels in late 2023 but global international passenger traffic will require one more year to recover and will reach 2019 levels only by the end of the third quarter of 2024.
At the country-market level, markets having significant domestic traffic are expected to recover to pre-COVID-19 levels in mid-2023 to late-2023. Markets with significant shares of international traffic are unlikely to return to 2019 levels until 2024. However, because of uneven availability of vaccines and worsening two-track economic recovery, some emerging and developing country-markets will probably not reach 2019 passenger levels before 2025.

The pessimistic scenario calls for a delayed recovery, resulting from the appearance of additional waves of infections and new variants of the virus. These will result in governments introducing more restrictive measures, creating new lockdowns, and travel restrictions. Under this scenario, passenger volume will remain weak, the industry only achieving 44.8% of its 2019 level in 2021 and 60.9% of the 2019 level in 2022. Global recovery to the 2019 level will occur in late 2024.

It is still predicted that, in the long-term, global traffic may take up to two decades to return to previously projected levels (those projected in the pre-COVID-19 forecast). A structural change—potentially preventing traffic ever returning to levels forecast before the COVID-19 pandemic—is still a possibility.

Chart 3: Medium-term global passenger traffic projection (indexed, 2019 = 100)

*The pre-COVID-19 forecast) scenario is based on a standard time-series forecast generated using the most up-to-date and complete historical data to December 2019. It also makes use of an adjusted World Airport Traffic Forecasts (WATF) 2019–2040 and considers the latest insights provided by ACI Regional offices and other inputs.
** Estimated passenger traffic volumes scenarios (current projection and pessimistic) are based on a broad range of inputs provided by ACI Regional offices and industry experts.

Source: ACI World

Chart 4: Medium-term global passenger traffic by type (in million passengers)

Source: ACI World

[1] This assessment assumes constant quarterly airport revenues on a per-passenger basis, even though preliminary evidence suggests that unit revenues may either increase or decrease, depending on a combination of airport-specific factors.

[2] International Monetary Fund. World Economic Outlook. Recovery During a Pandemic: Health Concerns, Supply Disruptions, and Price Pressure. October 2021

ENDS

1. Airports Council International (ACI), the trade association of the world’s airports, was founded in 1991 with the objective of fostering cooperation among its member airports and other partners in world aviation, including the International Civil Aviation Organization, the International Air Transport Association and the Civil Air Navigation Services Organization. In representing the best interests of airports during key phases of policy development, ACI makes a significant contribution toward ensuring a global air transport system that is safe, secure, customer-centric and environmentally sustainable. As of January 2021, ACI served 701 members, operating 1,933 airports in 183 countries.