Active crisis and profitability management for airports

The impact of dramatic events for airports

March 18, 2020

Dramatic events, e.g. the terror attack 9/11, the financial crisis 2008/9, or the currently raging Coronavirus, have a huge impact on the aviation industry. The resulting instant decrease of passenger volume causes airports, airlines and other related stakeholders to sway. Especially the large infrastructure of an airport cannot just be shut down, thus fixed costs continue to run. At the same time the usually very reliable revenue from airline charges, concession rents or parking fees drop from one moment to the other due to the reduced number of flights and travelers. Operations no longer fit the demand and immediate action is required. How can such a historic crisis be tackled actively? Which measures should be put in place to ensure liquidity and minimization of the losses? And which mid- and long-term measures have to be initiated to guarantee a smooth ramp-up of operation and get back to a profitable business after the crisis as soon as possible?

IATA recently published a scenario analyses expecting a strong deterioration of the overall passenger volume as well as the estimated revenue. If the Covid-19 virus continues to spread extensively, the aviation industry might be facing a revenue loss of 252 Bn $ – mainly in the seriously impacted regions Asia Pacific, Europe and North America.¹ As a comparison, the SARS crisis in 2003 was nowhere near as extensive as the current effects of Corona, and the aviation industry took over half a year to recover from it. Coming back from our current situation may take much longer and thus require stronger and more long-term focused measures.

Security tape in T2 at Munich Airport
The immediate passenger volume decrease caused by Covid-19 has led to a large profitability crisis for airports worldwide.      © Flughafen München GmbH
Crisis management approach by Roland Berger and Munich Airport International
Roland Berger and MAI joined forces and have developed an approach and service to help airport operators deal with crises like corona. © Roland Berger & Munich Airport International GmbH

Our approach to support airport operators

Roland Berger (RB), the German-based strategy consulting firm, and Munich Airport International (MAI) joined forces and have developed an approach and service to help airport operators deal with such crises. Key focus is to pro-actively manage a crisis instead of simply reacting.

  • 360° Check-Up:
    Identify operational and organizational risks connected to possible crises
  • Cash Management/State Aid: 
    Calculate financial effects to proof liquidity need for investors, banks and state aid
  • Emergency Room: 
    Establish a task force to monitor further developments and take effective actions
  • Performance Program: 
    Develop a short- and medium-term profit and liquidity improvement program to stabilize the company permanently

Due to short-term urgency, cost-side initiatives are to be evaluated and completed first. Which governmental aid programs are available and how can the airport benefit from them? How and where can fixed costs be reduced immediately to counteract lost profit? This includes areas such as flexible work arrangements, hiring freeze, procurement and investment stop, travel and training deferral/cut, energy consumption reduction as well as interim infrastructure shut-downs. Quick cost savings through reducing administrative and operating costs are mandatory and should be implemented at the soonest. 

Contact us for urgent improvements in profitability

Once the short-term measures are in place and liquidity is monitored continuously, mid- and long-term oriented arrangements are to be addressed to further reduce costs and create a sustainable path allowing airports to come back to profitable operations as quickly as possible.

With RB’s deep strategic and financial performance know-how and MAI’s extensive airport operations and commercial experience, we want to add value to the aviation sector and support airports around the globe getting through the crisis and ramping-up promptly after it. Our approach includes both classical and agile management methods, to guarantee that results become quickly visible in your profit and loss statement. If required, our actions function fully remote – we have all necessary tools in place to work at full speed, independently from being onsite or not.

Get in touch with us now, to benefit from our unique ability to identify and deliver rapid performance improvement with leading functional expertise, well proven methodologies and in-depth airport knowledge. We can offer you a fast engagement of five weeks leading to most urgent improvements in profitability.

¹IATA Economics March 24th, 2020

Joint Roland Berger & MAI approach
Get in touch with us to benefit from our unique approach and fast engagement leading to most urgent improvements in profitability. © Roland Berger & Munich Airport International GmbH