KUALA LUMPUR: The current surge in oil prices, triggered by the US-Israel conflict with Iran in the Middle East, has resulted in cancelled flights and additional surcharges, causing a drop in passenger traffic at airports.
The dwindling number of passengers is not just a headache for airlines. It is fast becoming a crisis for retailers and operators who depend on airport foot traffic to survive.
These businesses are now staring at a worrying summer outlook. June and July, typically among the busiest months for airports worldwide, are expected to see a significant shortfall in passenger numbers.
And if there is no truce in sight in the Middle East, operators fear December – another peak period in the air travel calendar – could also be badly affected.
The growing concern is already reflected on airport flight boards, with major airlines aggressively cutting capacity to offset rising fuel costs.
It was reported that Air India will temporarily reduce flights on several international routes between June and August, citing airspace restrictions in some regions and record-high jet fuel prices. South Korean budget airlines have slashed nearly 900 round-trip international flights and furloughed cabin crew as fuel costs continue climbing.
According to aviation analytics firm Cirium, airlines worldwide have already cut nearly two million seats from May’s flight schedules within the past fortnight alone. Cirium’s data showed that the total number of seats available globally fell from 132 million to 130 million during the final two weeks of April.
Closer to home, Thai AirAsia has reduced flight frequencies by 30 per cent during the mid-year travel peak, while Batik Air cut domestic capacity by 35 per cent in April.
When airlines pull back, the “captive audience” airport vendors depend on simply disappears.
For airport retailers operating around the clock, electricity, rental and staffing costs remain constant even as passenger numbers shrink sharply. This has created a dangerous disconnect.
Airport operators continue collecting rents based on pre-crisis passenger projections while tenants quietly absorb mounting losses. It remains unclear whether meaningful discussions between airport management and vendors have taken place.
The entire airport ecosystem – from duty-free outlets to industrial cleaning crews – is being squeezed by fixed operating costs and declining revenue.
If airport management fails to intervene through rent deferments or temporary discounts, some fear the airport service ecosystem could begin to collapse.
Industry observers believe airport operators must abandon rigid leasing models in favour of shared-risk approaches. By offering vendors financial breathing room now, airport operators may be able to prevent a wave of businesses abandoning their contractual obligations and leaving terminals hollowed out.
For vendors and staff staring at increasingly quiet walkways, the concern is no longer about long-term forecasts.
It is about surviving the next 90 days.