Written Assignment 4: Security and Safety Mandates

Written Assignment 4: Security and Safety Mandates

For this assignment, you are the assistant airport manager at your assigned airport. The airport manager has tasked you with preparing a briefing paper to be used at an upcoming regional conference for airport executives on the subject of “Coping with Increased Security Costs in an Era of Reduced Airport Revenues.”

  • Research security and safety mandates, both in the United States and in other nations. Evaluate the costs involved and how those costs are met both in the United States and in other nations.
  • In a briefing paper of 750 to 825 words (3 pages), explain three actions the airport must take to meet enhanced security- and safety-mandated requirements. Discuss revenue reductions that are occurring worldwide due to decreases in passenger traffic (caused by threats of terrorism and ongoing health concerns). Evaluate the resulting lost revenue from airport concessions and passenger fees. Incorporate an analysis showing how the airport is coping with these added requirements while incurring significantly reduced revenue.

Written Assignment 4: Security and Safety Mandates

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Written Assignment 4: Security and Safety Mandates

The current situation is posing a lot of security crises to the aviation sector as exacerbated by the prevailing COVID-19 crisis. The situation forces airports to beef up and adjust their security and safety measures and approaches to be aligned with the COVID-19 security measures (IATA, 2021). Unfortunately, the additional security requirements come at a time when normal operations of airports and air travel are highly affected thereby diminishing the generation of optimal revenue (IATA, 2021). Airports have to combat the situation and ensure that they survive and thrive amidst the challenges. The question is, “how can they do this?” This paper will discuss the subject of “Coping with Increased Security Costs in an Era of Reduced Airport Revenues.”

Security and Safety Mandates

Apart from the normal security checks that were previously put in place in airports, the advent of COVID-19 necessitates prompt adjustments to be made. For instance, passengers, both in the US and other countries are required to be vaccinated and take a COVID-19 test within 48 hours before embarking on cross-border air travel (IATA, 2021). Airports have had to implement on and off COVID-19 restrictions such as quarantines at the airports, setting isolation areas, general sanitization of the airport among others to mitigate the spread of the virus. Masking, keeping social distance, sanitization, are the normal customs at airports that force planes not to carry full capacity.

IATA also implemented the AVSEC insights Security Risk Intelligence Portal in 2020 to help in reporting incidences (latest restrictions and requirements) and managing and mitigating security risks (IATA, 2020). The situation also forced the TSA to speed up the rollout of new tech and new credential authentication and checkpoint screening technologies to enhance no-contact processes. The prechecked programs have also been implemented to facilitate the screening process. The FAA Office of Aerospace Medicine (AAM) has also had to make numerous policies surrounding COVID-19 vaccination to ensure safety (IATA, 2021). For instance, it has set minimum annual random testing rates for aviation personnel and may require the employer to conduct the testing.

Cost Implications

The enhanced security and safety in the airline industry increase the cost of operations at a time of dwindling airport revenue. IATA (2021) reports that “Expanding aviation security measures has resulted in significant increases in security costs that airports or third-party security providers have passed on to airlines and their passengers through higher security charges.” According to IFC, airports have been increasing revenues by 6.2% every year since 2017. However, the COVID-19 pandemic averted the trend and led to significant losses. “According to ACI (2021), total airport revenues fell by 35 percent worldwide in Q1 2020 (equivalent to $14 billion) and by 90 percent in Q2 2020 (equivalent to $39 billion)”. This is attributed to a drop in passenger traffic occasioned and boarders closures, lockdowns, and fear of contracting COVID-19 while traveling. The revenues drop was about 50.5% in Latin America and 47.3% in North America (IFC, 2021).

Coping Mechanisms

Both airports and governments have had to work together in response to the prevailing crisis. AFC (2021) recommends various ways such as federal financial assistance, tax relief, concession fee payments, airport revenue protection, and alleviation of airport slot usage requirements to help airports recover from the impacts of COVID-19 (IFC, 2021). So far, airlines have received financial packages but not airports. The US government provided a $58 billion assistance package to passenger airlines. Part of it ($3 billion) was a grant for airport contractors. ACI North America is currently pushing the US Congress to give $10 billion to meet airports’ needs (IFC, 2021).

Alongside government support, airports adopted strategies such as Capex postponement, curtailing of contract services, salary cuts or staff furloughing, and closing portions of infrastructure to reduce variable costs (IFC, 2021). Additionally, airports are scaling down dividends. Airports have also decided to cooperate with airlines. Some airports have had to relieve airlines and retail partners from some contractual obligations to adapt their payments conditions to the prevailing COVID-19 pandemic (IFC, 2021). This is because airports normally work under contracts that require their tenants to provide some minimum revenue guarantees. There was a move to implement Public-Private Partnerships (PPP) schemes in order to help private sectors as well. Under the PPP agreement, Force Majeure clauses can be invoked to extend financial assistance to private operators and ensure their financial viability (IFC, 2021).

The airline industry is indeed one of the worst-hit industries by the advent of the COVID-19 pandemic. All their normal operations came to a standstill despite having other normal bills and expenses, like security to cover. The problem was compounded by the need to abide by COVID-19 mitigation measures and regulations that keep being implemented and adjusted as the situation persists. Complying with these measures means reduced revenues generation but more expenditure. The industry is still not out of danger even as countries open borders and allow air travel. Airline industries must still adhere to COVID-19 safety measures and strive to survive the challenges and contribute as much as possible in the fight against COVID-19.

 

 

References

International Finance Corporation (IFC). (2021). The Impact of COVID-19 on Airports: An Analysis. https://www.ifc.org/wps/wcm/connect/26d83b55-4f7d-47b1-bcf3-01eb996df35a/IFC-Covid19-Airport-FINAL_web3.pdf?MOD=AJPERES&CVID=n8lgpkG

IATA. (2020). Aviation Security. https://www.iata.org/en/programs/security/

IATA. (2021). Security Charges. https://www.iata.org/contentassets/4eae6e82b7b948b58370eb6413bd8d88/security-charges.pdf

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