Airports revising terminal designs in wake of virus

It’s difficult to tell whether Singapore Changi Airport is an entertainment complex or an airport.

Changi features a three-screen movie theater, an indoor butterfly garden, a rooftop pool and inventive eateries that attract as many locals as travelers.

With more than 400 shops, including Apple and Tiffany & Co. (there are two), the Changi Airport would be the fourth-largest mall by the number of tenants if it were in the United States.

An audience that is both captive and often affluent has made airport commercial square footage some of the most lucrative in the world. But the pandemic has crushed the commercial calculus at airports, and no one is sure what comes next.

The leading airport for concession and retail sales in the United States is Los Angeles International, with revenue of $3,036 a square foot, according to a 2018 report from Airport Experience News. Chicago O’Hare clocks in second with $2,718 in sales a square foot. By comparison, the average mall retailer is around $325 per square foot, according to 2017 data from CoStar.

But that’s all gone now, said Alan Gluck, a senior aviation consultant at ICF.

“In general, sales are in the toilet,” Gluck said. For example, concession sales at San Francisco International Airport in May were down 96 percent from a year earlier. Duty-free concession sales were down 100 percent, he said, because all the stores were closed. In May 2019, duty-free sales were $11.5 million.

Until passenger traffic returns, Gluck said, airport retail properties are not going to be profit centers.

“I believe that we need to reconsider existing heuristics unless we think that customer behavior will return to what we now consider normal,” he said, adding that activities like health screenings often cut into space for other needs, usually concessions.

Many concessions are likely to need more space for social distancing, which will cut down on the number of retail units.

The very amenities that once made airports a standout for profit are the same things that are proving to be challenging. For instance, Changi’s theaters are still shuttered not just for pathogen protection, but also because traffic is too low to justify expenses.

The airport’s traffic has fallen to 1 percent of what it was a year ago, which leaves little market for movies or gourmet meals, Tan said. The airport is using this time to close Terminal 2 to accelerate planned refurbishments, but the pandemic will cause some amenities to be replaced with new ones.

“The longer-term impact of COVID-19 on the facilities and amenities we provide remains to be seen,” he said.

So far, the pandemic has not paused terminals planned or in progress in the United States, although some airport operators are reconsidering amenities.

Kansas City International Airport is in the middle of a $1.5 billion terminal renovation plan to consolidate its three terminals into a single 39-gate giant, including a two-story fountain, a play area and updated concessions.

Other projects underway, including at La Guardia Airport in New York and in smaller markets like Lafayette, La., are moving ahead but taking a wait-and-see approach on adjustments.