With St. John's airport bleeding money, authority looking at all options to cut costs

With business nearly at a standstill because of the COVID-19 pandemic, the body that operates St. John's International Airport says it is reviewing budgets and capital spending.

April passenger traffic at St. John's International down 95.4 per cent

Passenger traffic at St. John's International Airport plummeted by more than 95 per cent in April, and the airport authority is predicting that revenues could drop by two-thirds this year because of the pandemic. (St. John's Airport Authority)

With business nearly at a standstill because of the pandemic, the body that operates St. John's International Airport says it has paused an expansion project and is looking at all options to cut costs.

The airport's chief administrative officer, Peter Avery, described the situation as "catastrophic."

"We continue to live off borrowing," he told CBC News.

The airport forecast revenues of $46 million this year, but Avery expects that the fallout from measures taken to contain the spread of COVID-19 to crush that figure by roughly two-thirds.

That's just a best guess, he added, since it's impossible to say when travel bans and restrictions will be eased, and how long it will take for the airline industry to recover.

"It remains to be seen what the future of operations looks like at YYT, and what the future of air travel in the province looks like when this is all over," Avery told Radio-Canada in a recent interview.

Peter Avery, CEO of St. John's International Airport, says all options for cutting costs are being examined as business dries up because of the COVID-19 pandemic. (St. John's airport authority)

In what Avery calls an unprecedented situation, passenger numbers at St. John's were down more than 95 per cent last month from April 2019.

In fact, just 5,424 passengers flowed through the airport in April, compared with 117,228 for the same period last year.

A similar blow has been dealt to major airports throughout Atlantic Canada, with experts now forecasting it will take three to five years for passenger traffic to recover to 2019 levels.

Terminal feels like a 'ghost town'

Avery referred to the airport terminal as a "ghost town," adding he's never seen anything like it. With the airport authority having been incorporated in 1998, which means he's including the aftermath of the Sept. 11, 2001, terrorist attacks in the United States.

And that's also bad news for businesses at the airport.

Brenda O'Reilly owns YellowBelly YYT restaurant and pub at St. John's International Airport, which has been closed for more than two months because of the COVID-19 pandemic. (Mark Cumby/CBC)

"We're bleeding money every day," said Brenda O'Reilly, owner of YellowBelly YYT restaurant and pub at the airport.

The 150-seat restaurant opened less than two years ago in the departures lounge, but is now closed because of rules that prevent in-store dining and traffic levels that would not make it viable to reopen.

"Our business model has been tossed upside down," said O'Reilly, who owns four hospitality businesses in the city.

Last month, she laid off 120 employees.

But of those businesses, she's least worried about the airport restaurant.

"People will eventually get confidence back to travel," she said. "We just need to control our costs."

On most days, there are five flights at St. John's airport, with the planes well below maximum occupancy. Typically, there are between 35 and 40 flights daily, according to the authority.

Terminal expansion period paused

But even though commercial activity has largely dried up, the airport is required to provide the highest levels of safety and security for medical flights, essential commercial travel and cargo services.

So in order to manage spending, the authority has hit pause on Phase 2 of a terminal expansion project and other non-essential capital expenditures.

"We're looking at every option there is to reduce costs," he said.

Most of the airport's revenues are generated from commercial flight operations, with the vast majority of flights arriving from other provinces, said Avery.

He said the airport has a "fairly healthy" balance sheet, but admitted that there will come a time when borrowing measures will "hit the wall."

Read more from CBC Newfoundland and Labrador

With files from Patrick Butler and Terry Roberts

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