The impact of COVID-19 on central Illinois airport revenue has been substantial as passenger travel was reduced by almost two-thirds.
Airports all across the nation have been losing revenue. Airlines using central Illinois’ regional airports such as United and Delta Airlines lost nearly $60 to $100 million of revenue per day in April.
- The University of Illinois Willard Airport lost roughly $500,000 in revenue with a 72% decrease of arrival and departure passengers in 2020 compared to 2019.
- Bloomington’s Central Illinois Regional Airport lost $2 million in revenue and had a 70% loss of passengers from 2019.
- Peoria International lost almost $1 million in revenue and had a decrease of 69% in passenger numbers compared to 2019.
Airport revenue, defined by the Federal Aviation Administration (FAA), includes “revenues paid to or due to the airport sponsor for use of airport property by the aeronautical and non-aeronautical users of the airport.”
But the federal government aided airports when passing the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act was intended to “improve the nation’s airport infrastructure, enhance safety, and strengthen growth in local communities, which is especially important as the economy recovers from COVID-19.”
The CARES Act included a $2 trillion economic relief package to help provide fast and direct economic assistance for Americans according to the Department of the Treasury.
The amount of aid given to the aviation industry was $1.2 billion. This grant was awarded to 405 airports in 50 states and six U.S. territories, and multiple airports in Illinois were given money to help with their troubles.
Willard Airport, located in Savoy, relies on one airline, American Airlines, who flies in and out on a daily basis. Destinations include Dallas Fort Worth, Chicago O’Hare, and Charlotte, North Carolina.
In recent years, the airport has received 42,000 passengers and provided $19.5 million on annual payroll for on-airport jobs. Willard Airport is a crucial service for Champaign’s businesses and the University of Illinois, as they average an annual regional economic output of about $99 million, according to its website.
Champaign’s successful increase of business revenue came to a halt once COVID-19 hit. With a 72.18% decrease in arriving and departing passenger numbers at Willard, American Airlines temporarily suspended all flights to Dallas Fort Worth and Chicago O’Hare in August 2020.
Unlike Bloomington and Peoria, Willard is not supported by tax revenues but rather revenues generated locally at the airport.
Willard Airport has kept its entire staff of 22 employees, without taking pay reductions. Executive Director Tim Bannon said “we have been very cautious on what voluntary expenditures we make and have set in place strict processes of approval for any out-of-the-ordinary spending.”
Willard Airport was gradually increasing its profits from parking and vehicle rentals and made a record $1.2 million by 2019. After a decrease in passengers flying in and out of Champaign, revenues “crashed” said Bannon, as Willard lost $205,170 from parking and rental services.
Rental car companies, like Hertz, filed for bankruptcy and left their spot in the terminal in September. Parking and rental fees made up 30 percent of Willard’s annual revenue, so this was a big hit, Bannon said.
Bannon said he could see Hertz coming back once traveling increases and open its vacated spot back up.
Bannon’s biggest challenge was dealing with the social distancing and online aspect of working from home.
“We had to rethink and relearn how we do our business and how we communicate,” Bannon said, when talking about working via Zoom meetings and other online aspects of the job.
For the departments that had to work at the airport, such as the fire department, they had to create staggered shifts to prevent the whole department from shutting down. Although this brought a new challenge to the airport faculty, Bannon said they were able to run the airport successfully. Because Willard is commission based, meaning they receive additional compensation based on business performance, they rely on the rental car companies, Flight Star and rental fees.
The airport received $1.8 million from the CARES Act. Bannon said the CARES Act was a “huge help” when it came to helping out the airport.
Willard Airport has used at least $1.3 million of their budget so far in 2020. Most of the money has gone to personnel ($662,624), fringe benefits ($250,496) and repairing the fuel system ($99,999.36). Other areas such as air service consulting services, utilities, insurance and engineering services were given money too.
Four airlines use General Wayne A. Downing Peoria International Airport in Peoria, Illinois. Allegiant, American, Delta and United all fly in and out of Peoria to multiple cities all across the country, such as Chicago, Las Vegas, Orlando, Punta Gorda and Atlanta.
Peoria International Airport has been hit very hard from the pandemic.
Peoria Airport Authority’s employer contribution rate for the Illinois Municipal Retirement Fund (IMRF) decreased from 9.23% to 0.90%.
Peoria was averaging $2.5 million in rental car revenue since 2017, and it hit a record of $2,685,334 in 2019.
But with the pandemic surging, they almost lost half that amount and will expect just around $1 million in the parking and rental car business. On the airline revenue side, passenger numbers at Peoria were hitting record high numbers up until March. After that, passenger numbers dramatically declined according to passenger reports.PIA-pax-chart
Director of Operations at Peoria International Airport Gene Olson initiated a successful business move to abate fees for landing, baggage, security, and rental services.
Any fees related to passengers as well as the rental car companies and restaurants were eliminated by the airport. All four airlines responded to his action for abating fees by thanking him and saying Peoria was the first airport to abate fees instead of delaying payments.
After seeing the slow progression of revenue since April, the airport committee requested to extend the abatement period for at least another six months in their November meeting. Depending on how things are by next spring and summer, the committee will see if they need to extend it again by June 30, 2021, before the abatement expires.
Of the 750 to 1,000 employees on the airport’s property, the international guard base and Army national guard base are the largest employers. The terminal employs 35 workers, 10 of whom are shuttle bus drivers. Those bus drivers were all sent home because of their older age and underlying conditions.
Olson said, “It’s counterproductive to have them shuttle people around during a pandemic.”
All other 25 employees are essential, so they haven’t been laid off.
Delta suspended service from Peoria due to Caterpillar’s halt on business flying. Olson expects Delta to come back once Caterpillar starts traveling again. Due to Delta’s vacation, 40 to 50 Delta employees lost jobs. The Hertz rental car company declared bankruptcy, which decreased the overall employment at the airport as well.
The CARES Act granted Peoria $6.2 million, which the nine-member commission decided to use for operating expenses, such as putting money into security services, fuel and employee health care.
With the help of the CARES Act and continuous rise of passenger numbers since April, the revenue for the financial year of 2021 is expected to increase by $200,000 in all units of the airport.
“People aren’t going to fly again until they feel safe,” Olson said.
Once a successful treatment or vaccine is introduced, Olson believes the aviation industry could get back to normal by the summer of 2022.
In Bloomington, Illinois, the Central Illinois Regional Airport (CIRA) is a popular airport due to its central location and local businesses such as State Farm. The airlines that fly in and out of Bloomington are Allegiant, American, Delta and Frontier. These four airlines serve eight destinations, including St. Pete, Florida and Denver, Colorado.
Bloomington lost 22,434 passengers from the previous year until October 2020, which was a 56.4% decrease.Oct-Ops-Media-report
Due to this lack of passengers, the airport had a 97% reduction in their passenger facility charge (PFC) revenue to pay for bonds from their terminal renovation. Bloomington also lost $5,000 in landing fees, where planes are charged for landing at the airport. The only department not fazed by the pandemic was freight, where FedEx only dipped down 6.5% from last year’s cargo loads.
Director of Central Illinois Regional Airport Carl Olson had to adapt to financial difficulties through precautionary steps, including unnecessary costs. Although the airport is operating at 100% of its typical and operating practices with only having to adapt to COVID, the airport postponed non-essential spending and abated airport fees. Like Peoria, it had to furlough some part-time, older employees to protect those at-risk workers from COVID.
On parking and car rental revenue, the Bloomington airport was averaging around $51,000 in parking, and vehicle rental revenue had been as high as $804,288 in 2019. Through the pandemic, parking and rental revenue dropped by $50,000.
The airport received $4.6 million from the CARES Act. Olson said this money took “a lot of pressure off airports,” as they were able to prevent the taxpayers from having to pay for the debt service towards their terminal renovation project.
Olson also used the airport’s capital budget as an advantage during the pandemic. He said it was a “great time to accelerate capital spending,” due to less traffic in the building. They used the capital money for preventative maintenance and start projects meant to be worked on later in the year.
The airport was helped by Rivian, the electric vehicle company. Rivian and the airport partnered up and successfully influenced Delta Airlines to open a nonstop service to Detroit, which started in September 2020.
Olson expects a quick bounce back for leisure travel, but a slow recovery for the airlines with business travel slowly increasing in the next couple years. Olson also described corporate flying as a successful operation, especially with the more convenient scheduling.
Recovery “at the end of the tunnel”
For now, airlines have had to adapt to these circumstances and have reassigned flights to the popular destinations of 2020, such as Florida and Arizona. As the airlines start flying to more popular destinations, their revenue will increase as well.
Although the impact of COVID-19 on regional airports was almost devastating, aviation professionals see the light at the end of the tunnel. As leisure flying is already recovering, business flying will take a couple years, says Bloomington Airport Director Carl Olson.
All three directors at Champaign, Peoria and Bloomington believe a successful treatment or vaccine for COVID-19 will improve the customer confidence of traveling with the airlines. Director Bannon guesses the aviation industry will get back to normal operations within one to four years, and financial year expectations for 2021 are already showing positive rates of airline usage.