U.S. airlines are putting together plans to cease all domestic and international commercial flights in anticipation of a mandated government shutdown of all passenger air travel.
This is yet another blow to the aviation industry, which has already experienced massive losses due to the COVID-19 pandemic. Almost all international flights have been canceled, along with half of domestic flights. Even on the flights that took place, most of the seats weren’t filled. Last Sunday, the Transportation Security Administration reported an 80 percent drop in travelers compared to the same day last year.
The potential for a complete commercial shutdown is still up in the air, as commercial flights are also vital for transporting mail and cargo, but the Federal Aviation Administration (FAA) is concerned about COVID-19 running rampant through air-traffic controllers and technicians. Already, more than a dozen air-traffic control facilities have closed for cleaning after their employees tested positive for the virus.
While airlines have received most of the attention, airports are feeling just as much pressure. Airports make most of their revenue from Passenger Facility Charges (PFCs). Commercial passengers pay $4.50 per leg of their trip, with a maximum potential charge of $18 total. Beyond explaining why we always seem to wind up in Atlanta, regardless of our destination, airports depend on these fees to fund FAA-approved projects that enhance safety, security or capacity.
“PFCs aren’t a significant amount in the cost of your ticket, but they are a significant amount of income for airports. That’s gone away, of course, along with the revenue from airport vendors and restaurants, which are also losing money,” said Jerry Chism, director of the aeronautics division at the Arkansas Department of Commerce. “That’s going to have a devastating effect on airports across the state. It already has been, and it’s going to get worse, I’m afraid.”
There are a few plans in motion to alleviate some of the economic hardships suffered by airports. “The FAA-funded airports across the country get airport-improvement funds for projects. Traditionally those have been funded 90 percent by the FAA, and the local city or county that owns the airport comes up with the remainder,” said Chism. In Arkansas, the aeronautics division pays for the remaining 10 percent for all federally-funded airports. “The FAA is proposing to not only make more money available, but also also make those grants entirely federally-funded,” said Chism.
This will alleviate some of the financial pressure felt by local airport sponsors, but many airports will still be short on funds moving forward, even after the COVID-19 pandemic is contained. Still, Chism said that Arkansas’ commercial service and general aviation airports will remain open, despite their financial struggles. “Traffic has been reduced across the board, so most airports across the state are running on skeleton crews, and this will impact employment at airports moving forward,” said Chism.
“There are no plans to close airports at this point, though. Commercial service isn’t all that happens at the airport,” said Chism. “Flights for health, safety, goods and services, people chartering business flights will still occur, although at a greatly reduced number.” Chism does note that Governor Hutchinson has the authority to mandate airport closures, but there has been no discussion of that eventuality so far.
Even with potential help from the FAA, airports will struggle. The Aeronautics Division is currently looking for ways to shore up its funds for Arkansas’ eight commercial airports, but that too is fraught with complications. “All of our revenue comes from sales tax on aircraft sales, parts and services and, primarily, fuel,” said Chism. “If you’ve looked at fuel prices lately, you’ve noticed they’re declining.”
The fuel tax mentioned is a true sales tax on fuel, a percentage on the total sale, so when fuel prices go down, so does the Aeronautics Division’s income. “We’re going to be working with less money, with customers who need more money. There’s going to be a wide delta between those two,” Chism said. “We’re looking at our grant program and other ways to help, but we have to be much more efficient with our money. I have a feeling the airports’ needs will far exceed our ability to help.”
While bailouts for airlines have dominated COVID-19 stimulus bill discussions, it’s unknown whether our nation’s airports will also receive federal financial assistance. Still, Chism is optimistic. “My hope is that we’re able to turn this thing around before we have to close the airports.”