Airports Council International – North America

Liying Gu, Vice President, Economic Affairs and Research

Air transport has remained one of the hardest-hit industries since the very beginning of the crisis and the path to full recovery to pre-COVID activity level appears to be a few years away. The challenge comes from all aspects of the operating environment: lower willingness to travel to avoid COVID-19, lower consumer purchasing power and discretionary cash, non-existing business travel and international travel that were top revenue generation sources pre-pandemic, persistently high fuel price, increasingly severe staffing shortage, to name a few.

The ongoing pandemic has resulted in a full-scale transportation crisis with the imposition of travel restrictions and the suspension of flights in a global effort to contain the spread of the virus. Passenger traffic volume at U.S. commercial airports decreased by approximately 61% for the full year 2020 compared to total enplanement in 2019. 2021 passenger traffic volume is estimated to decrease by 41% compared to 2019 level. In absolute terms, the total of 2020 and 2021 enplanements are estimated to be close to 940 million lower than the 2019 level, equivalent to wiping out the full year worth of 2019 passenger traffic.

U.S. airports are expected to lose more than $15 billion from March 2020 to March 2021 driven primarily by the reduction in passenger traffic activity and reduction/cancellation of international air service, which represents a significant setback from previously forecasted stable growth prospects. This revenue loss estimate includes losses in aeronautical and non-aeronautical revenues, as well as losses in the Passenger Facility Charge (PFC) and the Customer Facility Charge (CFC), but excludes federal relief grants.

U.S. airports’ debt burden has been increasing year over year in the past two decades to finance needed infrastructure improvements. Total debt outstanding for U.S. commercial airports at the end of fiscal year 2020 stood at $106 billion. Debt per enplanement for all U.S. commercial service airports increased significantly from $111 for FY2019 to $188 for FY2020, increasing by close to 70% in one year, driven primarily by the decrease in passenger enplanement. Airports need to serve their debt, which are cash payments that must be made regardless of the level of traffic and revenue.

U.S. airports will continue its recovery path in 2022 with many uncertainties driven by the emergence and outbreak of new COVID variants and the resulting impact on air travel demand.

Key Takeaway

  • The number one statistic that will drive our workforce needs is related to the pace of recovering business and international air travel.

National Independent Automobile Dealers Association

Robert A. Voltmann, CAE, CEO

Independent automobile dealers are, by and large, doing very well from a profitability standpoint. Very high new vehicle prices and low new vehicle inventory caused consumer demand for used vehicles to increase, which has supported both higher sales and profits for independent auto dealers. Pandemic-related stimulus has supported customer household income, leading to historically low delinquency/default rates.

Independent dealers are being challenged by employment, service/repair (parts availability, throughput, technician scarcity), inventory, and uncertain regulatory/compliance conditions. With stimulus funding ending and inflation raising the cost of basic life services, lower income buyers are being squeezed. This may result in an increase in default rates in 2023.

The Current Expected Credit Losses (CECL) standard was adopted by the Financial Accounting Standards Board in 2016, but implementation has been delayed repeatedly because of the potential severe adverse financial impact it may have on businesses that carry finance receivables (including leases). It is currently scheduled for implementation effective January 1, 2023. However, the data and portfolio performance metrics which will be needed must be developed in 2022. The new standard focuses on estimation of expected losses over the life of the loans, while the current standard relies on incurred losses.

Key Takeaway

  • Approximately 500,000 additional service technicians will be needed to support service/fixed operations between 2022 and 2025, due to dealership growth and a retiring workforce.