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Published in Economic Development
Passenger data suggest travelers are growing more comfortable with airline travel, but the future of the crucial business segment remains unclear. Passenger data suggest travelers are growing more comfortable with airline travel, but the future of the crucial business segment remains unclear. COURTESY PHOTO

GR airport traffic rebounds, though business travel and stimulus concerns loom

BY Sunday, September 27, 2020 06:50pm

GRAND RAPIDS — Passenger travel has steadily rebounded since the depths of the pandemic slowdown, but Grand Rapids airport officials are concerned about the uncertainty over future business travel as well as a looming CARES Act deadline that could cause tens of thousands of layoffs at airlines.

Airlines’ $25 billion lifeline as part of the federal CARES Act required the air travel companies to avoid layoffs and maintain operations through September. Without additional relief from Congress, airlines have said up to tens of thousands layoffs could come starting next month.

“Sept. 30 is a big date for a lot of us,” Tory Richardson, president and CEO of the Gerald R. Ford International Airport, told MiBiz last week. 

Airlines want to see the federal Payroll Support Program — which provides airlines direct support for employee wages, salaries and benefits — extended beyond Oct. 1, and the threat of layoffs may be “a little bit of hype in trying to leverage” action from federal lawmakers, Richardson said. 

But while he’s noticed airlines pivot to offering more “sun and fun” destination flights, the lingering uncertainty remains over business travel, which tends to guide airlines’ decision making in certain markets, including Grand Rapids.

“Airlines are really concerned they’re not seeing business traffic come back,” Richardson said. “They’re not seeing healthy demand for traffic into the fall and winter months, and they’re concerned this recovery could take longer.”

Without business demand from certain markets, airlines will likely cut back flights and employees. That makes it harder for airports like Grand Rapids to make connections in other cities.

“At the end of that process, it will be harder for all of us,” Richardson said.

Additionally, the Grand Rapids airport expects to exhaust the $16.2 million that it was allocated from the CARES Act next month, Richardson said.

“At that point, we’ll hopefully be sufficient enough to break even on the operating side,” he said, adding that airport revenue goes into capital projects, such as a recent expansion Grand Rapids airport officials announced for a federal inspection station. In the short term, the project will add needed baggage claim capacity, but it also allows for direct international flights in the future.

Meanwhile, airlines and airports aren’t alone in facing business travel uncertainty, which is also affecting area tourism agencies and hotels.

Richardson said the airport’s recent survey of West Michigan businesses showed more optimism of when business travel might return compared to the national outlook, which suggests it may not fully return for up to two years.

In the months since the COVID-19 outbreak spread here in mid-March, Richardson has boosted his role as marketer to airlines, increasingly pitching Grand Rapids as a destination with air travel demand that would support flights.

“It’s more aggressive now with less certainty,” he said, adding that airlines are also approaching airports to feel out “the vibe, the sentiment of businesses” to give airlines “some indication about markets that are healthy. (Airlines) are asking us all the time what’s going on, what the business-to-business markets look like. The more we can get it from residents and business partners, the more helpful we are to airlines. They’ll look to restore service in markets that are healthy.”

Passenger travel trends

Even before the CARES Act deadline, some airlines started cutting service at Michigan airports. Last month, the Kalamazoo/Battle Creek International Airport was among more than a dozen in the U.S. where American Airlines announced it would suspend service in October, citing low demand.

While flights out of Grand Rapids to some destinations have been scaled back, the airport has seen a steady increase in passenger travel since April when total passengers were just 4 percent of what they were in April 2019.

In May 2020, the Grand Rapids airport reported 39,739 total passengers. Counts nearly doubled in June before reaching more than 138,000 total passengers in August, according to the airport’s latest Aviation Activity Report. Year to date, the Grand Rapids airport’s total passenger traffic is half of what it was through August 2019.

While those numbers reflect a growing willingness to fly among leisure travelers, the business community remains a big unknown, particularly because of the expected long-term shift to remote working.

“We’re in the same boat as the airlines in terms of needing to see the business travel come back,” Richardson said. 

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