The COVID-19 pandemic has hit Florida’s economy hard, with its airports feeling a big part of that economic pain. While a turnaround is already starting to take place, analysts say it will be a slow and difficult process before the sector returns to pre-pandemic levels.
In November, one of the Sunshine State’s biggest tourist portals, Orlando International Airport, saw a 300,000 monthly passenger increase over October to 1.8 million passengers. This was partly attributable to Thanksgiving holiday travel and because the airport had returned to 85% of its pre-pandemic number of flights.
“November traffic shows another month of gradual improvement for Orlando International Airport,” Phil Brown, CEO of the
Year-over-year, domestic travelers to Orlando airport were off 51.66% in November while international arrivals and departures were down more than 90. Combined, overall traffic was off 56.65% and on a rolling 12-month basis traffic was down 51.99%.
The authority's bonds are rated Aa3 by with a stable outlook by Moody’s Investors Service, A-plus with a negative outlook by S&P Global Ratings, AA-minus with a negative outlook by Fitch Ratings, and AA with negative outlook by Kroll Bond Rating Agency, according to the Municipal Securities Rulemaking Board's EMMA website.
"To date, we are seeing some of the strongest air traffic recovery, apart from some of the midcontinent connecting hubs, at the Florida airports, especially Tampa, Ft. Lauderdale and Orlando," Ken Cushine, principal at
Tampa International Airport saw passenger traffic decline by 55.2% in December compared to the same month in 2019. Domestic passenger traffic was off 53.41% while international travelers were off 87.83%. In the 12 months ending Dec. 31, the airport saw total passenger traffic fall by 54.49%. Cargo operations also declined in December, falling 6.8% from a year earlier.
“We couldn't have predicted the many things we took for granted would be gone in a flash in 2020. Our passenger numbers plunged, our international routes all but disappeared and many of the things we love most about Tampa International Airport changed drastically as COVID-19 put a serious dent in air travel around the world,” the airport
Hillsborough County Aviation Authority senior revenue bonds are rated A-plus with a negative outlook by S&P; AA with a negative outlook by Kroll; AA-minus with a negative outlook by Fitch; and AA3 with a stable outlook by Moody's.
At Miami, another major hub for tourism and a traditional draw for Latin American visitors, there are signs of airport life.
In the 17-day holiday travel period from Dec. 21 through Jan. 6, the
The airport said the upward trend in passenger traffic is expected to continue, as several airlines launch new flights to Miami and existing carriers expand their services. The airport averaged 278 daily departures and 44,818 daily seats in December, with hub carrier American Airlines handling almost 70% of the traffic.
Besides passengers, moving cargo is an important part of MIA’s economic mix.
“We’re down on the number of passengers year over year, no surprise, we’re averaging about 50% of the numbers we were doing in previous years,” Lester Sola, CEO of Miami International Airport and Aviation Department said last week on Miami's Community News program. “Cargo, however, is higher than what it was the year before.”
He said MIA was one of only a few certified pharmaceutical hubs in the world, and was well positioned when the pandemic struck. It became a major cargo hub to send personal protective equipment and pharmaceuticals to South America, Latin America and the Caribbean.
Last April, the Miami-Dade Board of County Commissioners approved a $65 million relief plan that provided financial assistance to airlines, concessionaires, car rental companies, cargo handlers, fixed-base operators, general aeronautical service permittees and other tenants at MIA that were in financial distress.
Also in response to the downturn, the Miami-Dade County Aviation Department lowered its fiscal 2021 operating expense budget by 4.0%.
MDAD said it was working to keep the airline cost per enplaned passenger (CEP), the principal measure of the cost of doing business at an airport, reasonable. While the fiscal 2021 CEP rose 31.1% to $24.81 from $18.92 in fiscal 2020, the department said that without taking certain financial cost-saving measures the increase would have been a lot higher.
The department reduced the debt service amount included in the airline rate base by $19.5 million through money set aside in the improvement fund used to offset future airline rates and charges; lowered the debt service amount in the airline rate base by $28 million due to an increase in the amount of passenger facility charge revenue used to the pay debt service along with the 4% cut to its operating expense budget.
Florida's other major air entryway, Fort Lauderdale-Hollywood International Airport,
December traffic more than doubled October's though it was still off more than 50% year-over-year.
The Sunshine State's bevy of holiday visitors didn't travel alone: more than a few of them brought a virus along for the vacation.
Florida's seven-day average of COVID-19 deaths, 99 on Christmas Eve, hit 177 on Tuesday, according to New York Times data. The seven-day average of new cases, which rose steadily and gradually from October to 11,295 on Christmas Eve, spiked to 17,991 on Jan. 8.
Still, many people remain at home riding out the pandemic, and foreign visitors are to a large extent
As a result airline traffic remains at depressed levels across the nation.
The U.S. Department of Transportation reported a decline of about 40% in scheduled flights in November, according to the 10 airlines it surveys.
“This data comes as North America (ACI-NA), the trade association representing commercial service airports in the U.S. and Canada, has reported its financial projections that U.S. airports will lose at least $17 billion between April 2021 and March 2022,” municipal bond analyst Joseph Krist said. “The $17 billion loss was in addition to another $23 billion deficit that U.S. airports were expected to incur between March 2020 and March 2021.”
Krist added that none of this data was a surprise and that it would take time for airports and related credits to recover, depending upon how fast a COVID-19 vaccine is rolled out.
According to Moody’s, the outlook for the airport sector remains negative for 2021. The agency said passenger numbers will remain uncertain and that a resurgence of the coronavirus could halt the recovery.
“Renewed travel restrictions or lower demand for travel as COVID-19 cases rise again would further weaken enplanement,” said Moody’s analyst Earl Heffintrayer. “Further weakening of passenger numbers would reduce U.S. airports’ operating revenue and increase stress on airlines.”
Moody’s forecasts enplanements in the first half of the year to fall between 25% and 45% from 2019 levels, Heffintrayer said, before they recover as the weather warms up and the vaccine becomes widely available.
"Absent very strong passenger recovery, however, airlines may consider curtailing or eliminating service, eroding both the income airports earn directly from airlines and non-airline revenue," Moody's said.
The report noted U.S. international airports are likely to recover more slowly than smaller ones, because the large hub airports received smaller grants under the federal CARES Act.
"These grants, however, have been vital to preventing airport rate increases to airlines and replacing lost non-airline revenue," Moody's said. "If passenger numbers don’t significantly improve, most large airports will likely exhaust those funds within the year and, without further Congressional action, will also struggle the most in 2021."
