While many of the challenges we faced in 2020 continue, I know I am not alone in being glad to have turned the calendar to a new year.
So many aspects of our economy and our lives that we took for granted previously were squeezed by the relentless grip of the pandemic in 2020. For nearly 2 million families across the globe, sadly, losses included the death of a beloved family member.
The Metropolitan Airports Commission (MAC) was fortunate not to lose board members or employees to the virus, but the pandemic and its impacts were a primary focus for us in 2020.
When the year began, we appeared well on the way to setting a new passenger record. Passenger levels in January 2020 were up 6.5 percent from January 2019. February was up even more, nearly 9 percent. Once COVID-19 reached our shores, however, the tide turned very quickly. By April, passenger levels had dropped to more than 95 percent below April 2019.
The impacts have been far reaching. I will break them down into three general categories: health safety, operational and financial.
Health Safety Impacts
Even before Gov. Walz issued a stay-at-home order, the MAC began increasing cleaning and sanitization of its facilities, particularly public spaces in the terminals at Minneapolis-St. Paul International Airport (MSP). When the governor issued his order, we shifted about one-third of our employees to remote work. Airports are essential services, however, and due to their job duties, the majority of MAC employees needed to continue working on-site at our airports, with new processes and equipment to help them stay safe.
The MAC board declared an emergency, providing staff with the agility and flexibility needed to respond quickly to health safety needs of travelers and employees and to operational needs of airport partners such as airlines, concessionaires and auto rental companies.
The board also approved a regulation mandating face covings at MSP days before Gov. Walz issued an executive order for businesses statewide.
Staff developed two key plans to guide our actions and those of other MSP businesses throughout the pandemic. The MAC COVID-19 Preparedness Plan established approaches and requirements to help keep MAC staff safe and to sustain our operations. The Travel Confidently MSP Playbook provided consistent guidelines for the MSP community to follow to help reduce the potential spread of COVID-19 at the airport.
Elements arising from the Playbook are apparent throughout MSP's terminals:
- Signs and decals encouraging mask wearing, social distancing and frequent hand washing
- Acrylic shields in spaces where airport workers and members of the public interact closely
- Hundreds of hand sanitizing stations
- Frequent, rigorous cleaning and disinfecting, including electrostatic spraying
In November, the MAC worked with the Minnesota Department of Health and one of its vendors to establish a robust COVID-19 community testing site at MSP, providing a convenient location accessible by vehicle, mass transit and air travel.
Operational Impacts
Last March and April, airlines quickly reduced flight schedules and routes in response to the sudden drop in air travel demand. MAC staff identified spaces at MSP where airlines could park planes until demand increased enough for them to be returned to service. We also worked with airlines to accommodate their decisions to discontinue use of some gates and to reopen them when flight activities warranted. In addition, we entered into an agreement with Delta Air Lines to allow many of its employees, who historically have parked near Terminal 2 and been bused to Terminal 1, to park in Terminal 1 ramps instead so they would not have to experience a shared ride to get to their worksite during the pandemic.
The drop in passengers led airport concessionaires to close many of their venues and to reduce hours of operation for others. MAC staff worked with concessionaires to ensure sufficient venues were available to serve travelers and to phase re-openings to help keep the concessions program as financially sustainable as possible. We also found places for auto rental companies to park the large number of vehicles not being rented due to the reduction in travel.
In addition, we assisted airlines and our federal partners with queueing changes and installation of acrylic shields to provide a safer environment for travelers and employees. We also changed operating plans and processes within the MAC to increase physical distance among employees and reduce the likelihood that a sick employee could sideline a whole work unit and function.
Financial Impacts
COVID-19 has taken a grim financial toll on virtually all sectors of the travel and hospitality industry, including airlines, airports and airport concessionaires.
When the pandemic hit, the MAC cut discretionary spending and froze hiring, reducing its workforce through attrition.
While we are still compiling final year-end figures, we estimate that MAC ended 2020 with operating revenues approximately $194 million below budget. When you include a decline in projected passenger facilities charges of roughly $51 million, you have a year with $245 million less coming into the MAC than we were counting on.
Receipt of more than $125 million in federal CARES Act funds offset a portion of that loss, helping cover debt service and limited operational and payroll expenses. Federal relief legislation that passed in the waning days of 2020 will provide far fewer but still very welcome additional dollars to help during the continuing travel downturn. I want to thank Minnesota's Congressional delegation for their strong support of Minnesota's airports and for their help in securing federal financial relief.
Other businesses at MSP have also been hit hard financially. We took action in 2020 to help our airport business partners as we work to get through this crisis together. That effort is important to ensure MSP remains competitive with other airports taking similar measures and to maintain a strong position for success as the industry recovers. The MAC deferred certain rents and fees for key commercial tenants, providing approximately $24 million in rent relief for concessionaires, auto rental and passenger service companies and $41 million for airlines at MSP.
Other Major Achievements
While impacts of the pandemic dominated much of our focus in 2020, we were able to take other major actions to strengthen MSP long term. Our success and MSP's reputation as one of the best airports in North America depend not only on airlines and commercial service providers, but also on the thousands of workers who help make MSP an airport of choice for travelers.
After many months of research and debate, this fall our board took action to ensure MSP has the stable, experienced, high-quality workforce it needs for years to come.
In September, the MAC board added labor peace and worker retention language to several commission policies. Those provisions will help retain experienced MSP employees when service providers change and will ensure key services are uninterrupted by labor disputes.
The next month, the board approved a new ordinance that will phase in a $15 minimum wage at MSP. The ordinance applies to a wide array of workers who provide services impacting travelers, including those involved in passenger-related security, in-terminal passenger handling services, ramp services, in-flight catering, cleaning and concessions. Higher wages will help businesses at MSP compete for workers with businesses in Minneapolis and St. Paul.
As of Jan. 1, those workers are required to be paid at least $13.25 an hour, an amount that will rise to $14.25 on July 1, 2021, and $15 on July 1, 2022, concurrent with the $15 minimum wage effective date in Minneapolis. The minimum wage will then be adjusted annually to reflect increases in the cost of living.
In addition, we continued to move forward with airport improvement projects that were already underway, were essential or were beneficial to do now rather than later for financial or practical reasons.
A Note of Gratitude
I mentioned how key Minnesota's Congressional delegation has been in supporting our airports and our industry. It's important to also acknowledge others whose support helped us get through an unprecedented year with a strong operation and expanded safety protocols:
I look forward to continuing our partnership with these and other entities in 2021.
Looking Ahead
While the aviation industry made some progress toward recovery in 2020 – passenger levels at MSP rose from 95 percent below 2019 levels in April to between 60 and 70 percent below 2019 levels in the fourth quarter – a successful vaccination program is key to more substantial, sustainable air travel demand. The path to vaccinating most people in the United States and in nations airlines typically serve from MSP is also the path to recovery of the travel and hospitality industry.
The recovery will be a slow one, particularly for business travel, which in recent months has been largely supplanted by virtual meeting technology. Analysts suggest it could be 2024 or later by the time the industry fully recovers, and some business travel loss could be permanent. As we work our way toward recovery, we will continue our Travel Confidently MSP program to emphasize the health and safety of those who use the airport. We will also work with federal, state and local health officials to develop a COVID-19 vaccination program not only for MAC staff, but also for the MSP employee community as a whole.
The new year holds tremendous hope and opportunity to begin moving past the global pandemic and reclaiming the freedoms and personal interactions on which all our lives are built. There is a lot of work ahead of us to get there. The MAC is up to the challenge, and I know you are as well.
I wish you all the best in 2021.
Sincerely,
Rick King
MAC Chair
