When Will Turbulence End For Phoenix Sky Harbor Airport?
Fewer travelers and more hand sanitizer. Closed restaurants and postponed construction projects. After six months of turbulence at Phoenix Sky Harbor International Airport, we check current conditions and future expectations.
It took Michael Acierno 4.5 hours to arrive in Phoenix.
“Masks on the whole time,” he said.
Acierno planned the trip three months ago. The pandemic had him itching to get away from his crowded home in downtown Miami and drink in open space. That led him to the Grand Canyon state.
He had plenty of space while waiting to collect his bags on a recent Friday. The latest data — from July — show Sky Harbor passenger traffic was down nearly 65% compared to the year before. Phoenix Aviation Director Jim Bennett says traffic will likely be down at least 50% through the end of the year. And it’s not expected to return to 2019 levels until 2023.
“We have placed about $800 million worth of investments on hold until we get a better understanding of the recovery timeline,” Bennett said.
He means projects like a new crossfield taxiway and new concourse at Terminal 3. Bennett said the department will save about $30 million this fiscal year by hiring only critical positions, shutting down some elevators and escalators, raising airport temperatures and turning off lights.
The lights came back on last Friday at Joya Kizer Clarke’s two retail shops. They’re located past security at Terminal 4.
“TSA is reporting they’re at about 40% of 2019 numbers,” she said. “We’re going to run very, very lean at that 40%.”
Like many local business owners at the airport, Kizer Clarke operates her own enterprises and has joint partnerships with a bigger company. The partnerships are part of a federal program designed to create a level playing field for socially and economically disadvantaged business owners to compete for airport concession contracts.
It’s a source of pride for Sky Harbor, which markets itself as "America’s Friendliest Airport," to feature more than 40 local businesses — like PHX Beer Co., Bunky Boutique and Lo-Lo’s Chicken and Waffles. In 2019, Sky Harbor was named Best Airport Shopping in USA Today’s 10 Best Travel Contest. Sky Harbor's short wait times, dining and WiFi helped it land the top spot in the Wall Street Journal's 2019 rankings of the 20 largest U.S. airports.
“We’re still in the survival mode,” said Bruce Mosby.
He has a handful of restaurants as part of a joint partnership with a multinational company, along with two coffee shops of his own inside Terminal 4.
“We don’t have a pivot,” he said. “We don’t have an opportunity to have a drive through or a pick up.”
On a recent visit to Terminal 4 in early September, only one restaurant and one retail shop were open pre-security. Twenty others were closed. Sky Harbor’s providing rent relief through the end of the year, letting businesses pay based on a percentage of sales only, generally 13% to 15%. While it’s appreciated, Mosby said it needs to last longer — especially since Sky Harbor predicts the recovery will take three years.
“If we end up going out of business in, scores of us, then you’ve got an airport that's looking devastated,” Mosby said.
“If we end up going out of business, scores of us, then you’ve got an airport that ends up looking devastated.”
— Bruce Mosby
During my visit it felt a little like walking through a shopping mall that’s seen better days. Instead of condiments being stocked, chairs are stacked on tables. Instead of browsing T-shirts and sunglasses, people glance at dormant stores.
“I feel fully confident that not every single store will reopen,” said Kizer Clarke.
She predicts the concession landscape will change.
“I think that we’re going to see a lot of shifts in the industry as a whole and definitely the physical shifts in what opens and what doesn’t," she said. "And what concepts might change, not all concepts are profitable."
Providing rent relief through December will cost Sky Harbor about $20 million. The airport system doesn’t count on local tax dollars, it relies on state and federal grants and customers. Last year, Sky Harbor revenue totaled more than half a billion dollars. Concessions, car rentals and parking fees made up about 40%.
The airport received nearly $148 million in federal stimulus money to help with operating costs. Sky Harbor is using most of it to cover debt obligations for construction projects the airport says will be needed when more people feel comfortable flying. But Bruce Mosby worries some business travelers will never return.
“Some of those companies may say you know what a percentage of our workforce doesn’t need to travel anymore,” he said. “We’ve been Zooming so much and conference calling, that there’s a percentage that could do that and not travel.”
Public health is promoted throughout Sky Harbor. The airport recently added ultraviolet light sterilizers to some escalators, hand sanitizer is stationed throughout the terminals and a there is at least one personal protective equipment vending machine selling masks and gloves.
For first-time Arizona visitor Michael Acierno, the big confidence boost came after taking his seat on the plane.
“Luckily, me I didn’t have anyone in the middle,” he said. “I made out in that situation.”
How long some airlines will keep those middle seats open remains unknown. Just like the recovery. There’s no clear path forward. And the impact goes beyond the airlines, restaurants and rental car companies. A 2017 report by Arizona State University W.P. Carey School of Business Seidman Research Institute found operations at Sky Harbor supported nearly 47,000 jobs — from private contractors building the Phoenix Sky Train to federal employees.
In the coming weeks, thousands of airline and restaurant workers face longer furloughs and permanent layoffs. Without a doubt, 2020 has been Sky Harbor’s most turbulent year. And with a cloudy forecast, no one knows how many bumps are ahead.