The coronavirus has significantly disrupted operations at Northwest Arkansas National Airport (XNA) with passenger traffic down nearly 70% early this week, and some planes leaving the Highfill airport with only a handful of passengers or empty.
Officials at XNA, the state’s second-largest commercial airport, discussed Wednesday (March 18) the impacts from the coronavirus, or COVID-19, pandemic during a meeting with the airport’s board of directors. The meeting was hosted as a conference call amid the outbreak.
In the first two months of 2020, enplanements, or passengers flying from XNA, rose 16.9% to 134,450, from the same period in 2019. Enplanements increased 14.9% to 67,144 in February, from 58,400 in the same month in 2019.
“We’re off to a fantastic couple of months,” said Tim O’Donnell, chief financial officer.
However, in early March, enplanements started to fall and were down significantly by mid-March. On March 4, United Airlines notified XNA that it would suspend flights between XNA and San Francisco International Airport as a result of the coronavirus outbreak. The flights will be suspended between April 1 and Oct. 1.
Kelly Johnson, chief operating officer and airport director, also said United Airlines is reducing its flights from 15 to nine per day. The carrier also will suspend flights between XNA and Newark Liberty International Airport from April 1 to June 3. Johnson expects other airlines to consolidate multiple daily flights and change the types of aircraft used. Delta is looking to reduce capacity nationwide by 40%. Allegiant is cutting 15% of capacity nationwide, and this is expected to rise to 30% to 35% in the coming weeks.
The Transportation Security Administration reported passenger traffic through the airport had fallen about 40% over the past week, compared to the same period in 2019. On Monday and Tuesday, the traffic declined nearly 70%, from the same days in 2019, Johnson said.
In his financial report, O’Donnell compared the impact from the coronavirus to the impact of 9/11 on the airport. Enplanements fell 31% in September 2001, from the same month in 2000. For 2001, enplanements rose 2.1% to 374,722, from 367,157 in 2000. O’Donnell expects the coronavirus will have a greater impact on enplanements.
O’Donnell also provided financial projections related to the impact of the virus. Projected airport revenue was expected to be about $21.8 million for 2020. Including capital projects and other expenses such as employee salary, the airport was projecting a $1.31 million shortfall for the year. A 50% impact on the budget as a result of the virus could negatively affect it by $10.8 million. O’Donnell said the airport has a “cash flow cushion,” but he expects the airport to start using it.
CEO Aaron Burkes said no one knows how significant the impact of the virus will be, “but we do know it looks really, really bad.” S&P Global Ratings projected airline travel will fall 30% this year, but Burkes expects it will be worse. Air travel declined 70% for several months in Hong Kong as a result of the severe acute respiratory syndrome (SARS).
“We had our first plane that flew out of here empty [Tuesday],” Burkes said, adding that XNA has other flights with five or six people on board the airplane. “I think the impact is huge. The question is how long will this last.”
Andrew Branch, chief business development officer, said Paradies, the airport’s food and beverage provider, has asked for an abatement from the financial targets it’s required to meet. The food and beverage shops in the airport have started cutting hours and staff and have transitioned to carry out only. With regard to rental car companies, Branch said a minimum annual guarantee it provides XNA would be adjusted based on contract terms. And before any changes would be made to their financial obligations to the airport, he said the board would need to vote on them.
XNA has established soft hiring freeze amid the outbreak, and only essential employees will be replaced. Burkes said XNA employees who can work remotely will be encouraged to do so.
Regarding rumors about whether the federal government would shut down domestic travel, Burkes explained to the board if flights are grounded, it would be an opportunity to complete projects. If it does happen, he said the grounding might take place between 14 and 60 days. The board in a future meeting might discuss possible projects the airport could complete. Burkes didn’t give any specific projects.
Burkes also noted moving ahead with the design for several capital projects, such as the connector bridge from the parking deck to the front of the terminal and for the bridge to the checkpoint area. He explained the design could be completed now, and after the virus outbreak ends, the airport might save money on construction costs and receive lower interest rates on loans.
On Wednesday, XNA board members approved design work for a $15.99 million project to connect the parking deck to the terminal with a 20-foot-wide pedestrian bridge. The 16,167-square-foot project would include an expansion to the terminal entrance, lobby, canopy leading to the parking lot and the enclosed bridge over the road in front of the existing entrance. It was one of three options board members considered after officials cited concerns with the cost of the original design. The original would have cost $28.02 million and be 43,941 square feet.
Also Wednesday, the board selected Fentress Architects to design the western concourse project. Fentress is expected to work with Hight Jackson Associates and Garver. Board members also approved to apply for a loan from a program of the U.S. Department of Agriculture. If approved, the loan would help pay for capital projects, such as the terminal improvements and western concourse expansion.