Sunday, June 23, 2024

As air travel industry struggles, Shreveport Regional looks to mitigate costs

by BIZ Magazine

The Shreveport Regional Airport (SHV) is in dire straits as travel bans and fear among passengers over COVID-19 has caused a massive decline in traffic.

Wade Davis, Shreveport Regional Airport director, gave his report to the Shreveport Airport Authority Board May 12, which he classified as “pretty close to doom and gloom.” 

He said SHV has seen flight reductions by all carriers. Normal passenger volume is 1,000 per day and the airport is currently handling 122 per day. However, he noted that was up from 8% earlier in the week.

“So, it’s coming back, but it’s coming back very slowly,” Davis said.

He added that SHV is only seeing 92 parked cars per day, as opposed to the normal 750 cars per day. All airport restaurants are closed. Reduction of flight capacity since March is “pretty drastic.”

The airport is focused on cost savings, a major measure being their plan to consolidate Concourse B into Concourse C and mothballing Concourse C entirely until things improve. That would affect American Airlines and United, which means it requires both of their approval. Primary savings would be in energy costs, but no dollar estimate at this point.

“We need to plan to cut costs,” said Davis.

He told board members that the airlines are “bleeding cash,” so they are interested in anything that reduces costs. SHV has held preliminary conversations with American and United, both were interested. He added that it will take a month or more before any serious outcome. The concourse’s future reopening will depend on traffic and customer decisions. 

He added that SHV has $1.3M on immediate hold. Beginning construction on a new terminal awning has been cancelled and expansion of the parking lot is on hold. 

“We’re a long way from needing excess capacity in the parking lot,” Davis said.

Other cost saving measures include the closure of the security gate at Gate 2, reduced security presence on an 8-hour shift, reduced staffing level, a hiring freeze, and the repurposing or liquidation of administrative vehicles.

SHV has secured $5.6M for Shreveport Regional Airport and $69,000 for Downtown Airport from the Emergency Cares Act. The airport is planning on using that money for bond debt and bulk of operational expenses. 

Davis went on to explain that the airport has $13.4M in budgeted revenue. He said the worst case scenario sees the airlines pay just under $5M, leaving an $8.5M shortfall to be plugged by the $5.6M in federal funds, which is designated for operational expenses. 

“That is a highly unlikely scenario, but it is something to consider,” Davis said.

Board Chairman Jonathan Reynolds asked about landing fees reductions to make SHV more attractive to airlines. Davis said that isn’t an issue as airlines are in “crisis mode.”

“They don’t know which way is up,” Davis said. “We met with Airlines in early May and there was no positivity there, whatsoever.”

Board member Waynette Ballengee asked if surrounding airports would feel the negative effects more than Shreveport, and if SHV could benefit from that. 

Davis said SHV history indicates faster recovery than the market. He said that would put SHV in a better position than surrounding airports.

He noted a couple of positives in his report. He cited the slight uptick in traffic, and the leisure market indications. For example, JetBlue has noted upticks in service and Allegiant is looking to schedule their flight out of SHV and re-booking information looks solid. 

“Those are the only bright spots in a dark and gloomy outlook right now,” Davis said.

He pointed out investment reports that forecasted one of the major U.S. air carriers will go bankrupt thanks to the coronavirus pandemic.

Continued airline schedule contractions, systemwide reductions. Airlines are going through a tough time.

“Lack of customer demand is everything,” Davis explained.

He added that July 1 is crucial, as that date is when the airlines will reveal their July 2020 schedule announcement. That will provide the first glimpse of what airlines’ schedule looks like post CARES Act. 

“They are required to maintain employees in some basic degree service level until October. When July 1 rolls around, looking to see what that shock looks like,” Davis said.

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