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A COVID-19 Update from WATF President Keith W. Meurlin

LOCAL AIRPORTS
Washington Dulles International Airport (IAD)
is operating, but at a very limited activity level. Almost all foreign flag carriers have ceased operations in response to both the U.S. and home country border closings. United Airlines announced today that it will cease operating 95% of their international service. United also is planning on dropping approximately 60% of its domestic service.

The airport has closed the north employee parking lot and asked employees to park in the west parking garage near the terminal. This will significantly reduce the costs associated with operating the employee parking lot. The Metropolitan Washington Airports Authority (MWAA) was able to do this because of the significant decrease in traffic.

The Transportation Security Administration (TSA) reported that, on a recent day, they only processed 6,500 passengers and employees through their screening process. This is a 75% drop from the same time frame last year. As of today, one TSA screener has tested positive at IAD.

The Washington Airports Task Force (WATF) was contacted by Senator Warner’s (D-VA) staff to talk about the impact at the airport to employees. We discussed the number of employees that do not work for MWAA or the airlines, but for concessions, ground service providers, flight kitchens and many more. We also talked about the relief package that has been requested by airports and the cost structure to finance an airport. The WATF stressed that the relief package will be extremely important to airports, especially since MWAA reduced the Cost per Enplanement (CPE) at IAD to $17, largely through growth in non-aviation revenue from concessions. The Coronavirus crisis has wiped out the concession revenue and will force that CPE number to grow dramatically. The CPE ultimately falls on the airlines, and this will further exacerbate their financial issues.

One bright spot is the number of repatriation flights that are arriving at IAD, returning U.S. citizens who were stuck overseas and unable to obtain a return flight reservation.

Reagan National Airport (DCA) is also experiencing reductions, but to a much lesser degree. Airline traffic is down approximately 20%.

The MWAA at both DCA and IAD follow the guidance provided by public health experts at the federal Center for Disease Control and Prevention (CDC), Customs and Border Protection (CBP) and the Virginia Department of Health. For real-time updates of the status of the airports, please follow Dulles Airport and Reagan Airport or visit flyreagan.com and flydulles.com.

Governor Hogan has restricted access to the BWI terminal to ticketed passengers and airport workers only.

U.S. AIRLINES
Three weeks ago, historically low fares helped U.S. airlines fly 2.5 million people and 58,000 tons of cargo daily, but the coronavirus crisis has dropped load factors of up to 100% down to as low as 10%. U.S. lawmakers are considering a bill that would allocate $58 billion to airlines, which generally aligns with industry’s request. Separate efforts will address manufacturers and suppliers, either directly or through general approaches, such as small-business loans.

The push for aid comes amid projections that the U.S.’s biggest carriers could run out of cash this summer if demand does not return and no financial help comes in. A zero-revenue scenario for the rest of 2020 would see all three of the U.S.’s big global passenger carriers run out of cash by fall, but all other airlines would still have money in the bank at the end of the year, a Vertical Research Partners analysis shows.

Delta Air Lines and United Airlines would run out in the second quarter, while American Airlines would run dry during the third quarter. Among other publicly traded carriers, Alaska Airlines would come closest to running out, while Southwest Airlines would end the year with the most cushion: more than $2 billion in the bank.

While the administration and Senate Republicans focused on providing payments to individuals and loans to a broad section of affected businesses, including airlines, AAAE has pressed aggressively for $10 billion in direct assistance to airports through AIP.

In a letter to House and Senate leaders, which the WATF signed, AAAE and ACI-NA wrote that, “Airports have built necessary infrastructure that has been funded, in large part, by nearly $100 billion in collective debt, with approximately $7 billion in airport bond principal and interest payments due in this calendar year. The rapid loss of revenue from the coronavirus outbreak and related measures to protect the public will severely impact the ability of airports to meet debt requirements and other necessary ongoing costs.”

The specifics of the latest Coronavirus package were being hammered out behind closed doors by Senate and House leaders and the White House over the weekend. Congressional leaders hoped to reach an agreement on principle on Sunday and approve a final measure early this week.

REGIONAL FINANCIAL IMPACTS
The Stephen S. Fuller Institute recently released a report on the economic impact of the Coronavirus on our economy: The Effect of the Coronavirus Pandemic on the Washington Region’s Economy.

The report states, “The coronavirus pandemic has ended the longest business expansion on record, although the information that confirm this will not be available for several months.[1] Unlike prior business cycles, the Washington region’s economy is not disproportionately insulated from its effects and will mirror the trajectory of the U.S.”

The Northern Virginia Chamber of Commerce is hosting a webinar on Monday, March 23rd from 2pm-3pm titled, “Keeping Your Workforce and Business Healthy During (and After) the Coronavirus Outbreak: A Whole Community Approach”. Click here to register. Presenters will include the county Department of Health, the Department of Economic Initiatives, Fairfax County Economic Development Authority, and the Community Business Partnership.

This is Fairfax County’s county page dedicated to information and resources for businesses impacted by coronavirus. The page is continually updated as new information is developed. Topics include:

Disaster loan assistance from the U.S. Small Business Administration;
  • Small business counseling organizations;
  • Worker and employer FAQ regarding Covid-19; and
  • The Fairfax County Business Emergency Operations Council dashboard to share information among the business community.

TRANSIT IMPACTS
Metro and Metro Access have reduced their service. The most up-to-date service information is here. WMATA asks that customers do not use Metro unless absolutely necessary.

HOSPITALITY IMPACTS

In an emotional video message on Thursday to Marriott International employees, CEO Arne Sorenson characterized the Coronavirus crisis as more severe for the hotel chain than the Great Depression and World War 2. He added that the chain’s global business is running about 75% lower than normal, hundreds of hotels have closed, and some may never re-open.

https://finance.yahoo.com/news/marriott-ceo-sorenson-details-crisis-161524903.html

An example of the effects of the Coronavirus on local business is Tony Stafford, CEO Ford’s Fish Shack. Tony actively supported the airport’s federal employees during the government shutdown, and routinely supports local charities. He operates three restaurants in Loudoun County and has had to close his locations because of restrictions placed by the Governor of Virginia to limit gatherings of more than 10 people. Tony has had to lay off 145 staff, however, he has been able to keep those employees on their health plan for 60 days. He, along with his salaried managers, is currently operating his restaurants in Ashburn and South Riding on a carry out basis only. He hopes that this will provide enough revenue to preserve his investment so that when the pandemic crisis is over, his employees will have a place to return to. Tony and Fords Fish Shack is no different than many local businesses.

The Great American Restaurants issued a letter to customers describing very similar circumstances. In addition, the Norton family, who owns the restaurant group, has established a fund to help support their 1,700 employees they had to lay off, where the family will match any contributions 2 for 1.

Keith W. Meurlin
President
Washington Airports Task Force
44701 Propeller Court, Suite 100
Dulles, VA 20166

(703) 572-8714
www.washingtonairports.com