Summit of the Americas: Review

View from the top: The CEO Chair sessions

The Knowledge Hub was home to a series of compelling one-to-one interviews, panel discussions and debates over the five days of the Summit of the Americas. We begin our coverage with video highlights from The CEO Chair sessions, featuring airport leaders from across the region.

“We have to come to terms with the fact that this [health issue] is here to stay. We have to start developing systems that can leverage technology to enhance safety and restart travel.” Corporación América Airports CEO Martín Eurnekian – who is also Chair of airports body ACI World – opened the Summit of the Americas event with a view of both the short-term and lasting consequences of COVID-19 on his own business and on the wider aviation industry. He also offered insights into how recovery will take shape in 2021 and beyond. Eurnekian said, “The whole industry on average is experiencing a -70% decrease in traffic figures year-on-year in 2020 vs 2019 and that trend is continuing through 2021. “There are two factors driving this. The first is fear, which was the main driver at the beginning of the pandemic that stopped travel. Now that the pandemic has evolved into a new kind of normality, the second factor preventing industry recovery is the restrictions on travel.” “We are in uncharted territory here,” he added. “We’re working with the information we have and putting a lot of hope into vaccines. In an asymmetric way, these programmes will eventually restart international travel.” However, Eurnekian also believes that the industry should take affirmative action beyond simply putting its faith in the global vaccination programmes. He commented, “We also need to think of a plan B. As an industry, we need to communicate with governments and develop a coordinated approach.”

Connecting the industry and creating a seamless journey must be a priority for the airports sector, said Martín Eurnekian; pictured is Dufry at Buenos Aires Ezeiza

Asked whether the voice of the aviation industry has been sufficiently heard through the crisis, he said, “Our voice has been raised, but I don’t think we have been heard enough. If you look at the existing measures in place, it’s clear that they aren’t globally-coordinated nor do they maximise the available resources to make travel safe again. One of the reasons it’s so hard to create a unified response is because there are so many sovereign governments who have an opinion on how to do this integration.” One of ACI World’s priorities is to find ways to work with governments for a restart. Key to this, he said, is to remove the negative stigma on travel. “At the beginning, passenger safety was a priority and travel was pinpointed as one of the initial reasons why the virus spread. “So many restrictive measures were placed on the travel industry that are disproportionate to the real risk today. The virus is already all over the world. We now know how it behaves and how to test it. Our priority at ACI World is to collaborate with governments and other stakeholders to develop new systems to allow the industry to restart.” Using the power of digital tools is also a strategic priority for Corporación América Airports. Eurnekian said, “We’re trying to create a roadmap for data-sharing, integration and collection that will be the raw material for industry recovery. Once completed, we will use this to propose new solutions, products and services. However, there is no way to do that if stakeholders’ systems don’t connect with each other. “Once we start the exercise of transparency and collaboration, we can transform the customer experience which will lead to more efficiency in terms of revenue and customer satisfaction,” he added. Click on the video below for the full interview.

“Our voice has been raised, but I don’t think we have been heard enough. If you look at the existing measures in place, it’s clear that they aren’t globally-coordinated nor do they maximise the available resources to make travel safe again.”

Corporación América Airports CEO Martín Eurnekian

In an encouraging signal of hope for the return of air travel in the Americas, Dallas Fort Worth International Airport CEO Sean Donohue said the company is aiming to hit 80% of pre-crisis domestic traffic this Summer and to reach 2019 levels by early 2022. That was one of many key messages from a compelling and inspiring interview on day two of the event.Addressing the potential recovery, Donohue said: “Short term we’re preparing for this Summer to be at about 80% of Summer 2019 when it comes to domestic travel. That is going to predominantly be leisure travel and people visiting friends and family. We believe, as we enter Spring 2022 we will probably be back to about 100% of our domestic travel. But the question is, when will international come back and we believe that might be towards 2023.” On support for concession partners, Donohue said it made sense to build back with partners that not only survive the crisis, but are in a position to support the airport’s growth. “As we look out over the next couple of years, we don’t anticipate being able to launch as many RFPs as we normally would. We are not sure our concessionaire partners will have the capital to put into new programmes and we need to recognise that and be sensitive to it. That’s why we have added two years of term to all our concessionaire contracts. “One of the reasons we’ve offered this financial support to our concessionaire partners is when the traffic does come back, we want them to be in a place where they can serve our customers. When I go to airports, and I only see a handful of concessionaires open, what I start to ask is when the recovery happens, will those concessionaires be there to help?

“I find that there’s a spirit to travel. I find that people like to make that connection and although it will take a little while to recover, we’ve got to continue working with all of our business partners and concessionaires to help them until the recovery takes full effect.”

Dallas Fort Worth International Airport CEO Sean Donohue

“If we do get to the 80% of our traffic this summer, our belief is the majority of concessionaires will be open and they will be able to serve our customers and that is a positive part of the recovery.” Among other support measures, the airport is extending the suspension of Minimum Annual Guarantees by six months through to 30 September 2021. For some leases, the airport will also delay percentage rent escalation by two years to 30 September 2023. In addition the board approved a waiver of all operating & maintenance and storage fees from 1 March 2021 to 30 September 2021. As reported, Dallas Fort Worth International was among the first airports in North America to respond to concessionaires’ calls for relief when the COVID-19 crisis struck. In early April 2020 its board ratified a crucial plan to move commercial partners from MAG-based fee models to a rent structure based on a percentage of sales. It also allowed concessionaires struggling amid the COVID-19 crisis to relinquish space without penalties or repercussions for their existing leases – an initiative also extended through to 30 September.

Hoping for a gradual return of international traffic at DFW Airport (3Sixty Duty Free at Terminal D pictured)

With the extension of these relief measures, by September the airport will have provided its concessionaires with US$120 million of financial support. On how DFW Airport has adapted, Donohue said: “I couldn’t be prouder of the employees at DFW during this past year. They’ve been incredibly resilient and flexible. In terms of our concessionaire partners [DFW commercial chiefs] Ken Buchanan and Zenola Campbell have just done a fantastic job not only supporting them but communicating with them, sharing information, listening to them. And that example has permeated throughout the organisation. “I made the decision early on that I would not furlough any employee, I would not reduce pay, I would not reduce benefits. And they have responded to that by doing a great job. We’ve transitioned a lot of employees to work virtually and that has worked better than we thought it would. “But we are an airport and two thirds of our employees have to show up here every day. And we’re hoping over the next couple of months will start to be able to bring some of our employees back on to the campus who have been working virtually. And then finally we are going to have to figure out what is the future and do we have to be more flexible? Working virtually has proven to be successful so how do we strike that balance between getting people together and back into the workplace, because there is a value to that. But we also must recognise that we probably have to be a little bit more flexible with allowing people to work virtually.” Offering a wider message to the industry, Donohue said: “This crisis is the single biggest disruption to the aviation industry we have ever seen in modern history, unquestionably, and it has had a significant impact both professionally and personally on people. That is why our focus has been on trying to support our employees and support our business partners. “But I am optimistic about the recovery. I find that there’s a spirit to travel. I find that people like to make that connection and although it will take a little while to recover, we’ve got to continue working with all of our business partners and concessionaires to help them until the recovery takes full effect. I believe the recovery will take full effect sooner at DFW and that’s a good thing for our partners. “Travel and tourism accounts for 10% of global GDP. It is an incredible amount of jobs, an incredible economic engine and, that spirit of travel, combined with the economic impact, is going to carry the day.”

To begin day three, New York John F. Kennedy International Air Terminal (JFKIAT) President and CEO Roel Huinink gave a revealing insight into how his business and its concessionaire partners have negotiated pandemic difficulties in a wide-ranging CEO Chair interview. The Dutchman talked of a “strong terminal community and culture” as the terminal he presides over negotiates the slow climb back from near zero traffic in the early days of the pandemic to a fast-improving position today. He reported that in recent weeks some 50-55% of 2019 domestic passenger levels have been restored and 30-35% of international passengers. He paid tribute to his own staff in keeping the terminal open throughout the pandemic period, and also to how the concessionaires – which at JFKIAT include Paradies Lagardère, DFS, Dufry, Hudson and SSP – have kept the commercial offer and passenger experience alive. “Exactly a year ago, we had an average of 2,000 passengers a day, only 200 of those international,” he recalled. “So it had dropped from a normal 65-70,000 passengers a day to almost nothing.” Huinink said that although airlines such as KLM and anchor tenant Delta have continued to fly each day, many of their planes were leaving with only 20-30 passengers. “But we continued to operate 24/7, we didn’t close a single hour or day, throughout the entire pandemic,” he said.

“Passengers and consumers want to go back to the magic of travelling, want to go back to having a great experience. And that starts at the airport with great retail concepts, food and dining options.”

New York John F. Kennedy International Air Terminal (JFKIAT) President and CEO Roel Huinink

Huinink – who said safety has been top of mind at the terminal since day one of the crisis – spoke with pride about how his staff kept the terminal in constant operation, to support the skeleton airline operations, which were bolstered by a pivot to facilitating cargo flights to what had previously been a passenger terminal only. “We are a small team of normally around 100 people, we maximise our outsourcing, but we chose to stop many of our contracts [to cut costs]. We had to make huge changes in our teams in order to keep our staff, keep the knowledge and keep working on the projects I had identified. “This meant that all of our staff had to work on the front line. I always give the example of our Head of Purchasing, who has been working as a security guard for two days a week, a role he has performed for a year now.” Those part-time front line workers included Huinink himself, of which he said: “As a leader, I think it is extremely important to walk the talk, to show that you’re there. If I ask my staff to be at the front line in the pandemic, I cannot sit behind my desk being arrogant. I need to be there too.” He acknowledged the contribution of retail and F&B concessionaires too. Huinink spoke at length about their contribution to keeping the JFKIAT flag flying: “The concession partners have been great. Kudos to them for remaining open even when passengers were not there. And they have really stepped up even if it was just with a few locations [initially].

JFKIAT has developed a virtual guide to New York City allowing users to experience its famous landmarks and destinations

“You have to strike a balance as a terminal operator… do you want to give the passenger the experience and make sure that everything is open, or do you let your partners close, because you don’t want them to lose money? “We have chosen to try and achieve both which is difficult and sometimes you have heated discussions. But I think because we’ve had those long relationships, we’ve always tried to find good solutions together.” Those concessionaires have been provided with minimum annual guarantee (MAG) relief by JFKIAT’s partner, the Port Authority of New York and New Jersey, which has had control of CARES Act funds from the US government. Of that relief, Huinink said: “We found a good solution. The MAG relief is in place and has been extended over time. We have not yet reset all the contracts, but obviously that is coming. And those discussions are ongoing. You need to make sure that the long-term commercial plan is in place and that will not come overnight. “I think we need to constantly adapt and change and see how we can get the best customer experience and open as much as possible without the retailers going bankrupt. So that is a constant going back and forth.” Addressing the future of commercial concessions, Huinink said we are likely to see more “data-driven concepts that are relevant to the passenger demographics”. He said: “I really hope that this pandemic is able to increase the pace of implementation. I think it is extremely crucial to reach out to the consumer earlier on in their journey, get them into the mindset to buying and digitalisation and digital shopping experiences. Ecommerce is definitely something that will help there. “The Trinity thinking will always be at the forefront. This is an important area and we need to find a model which we still haven’t found as an industry. How do we all benefit and make the cake bigger instead of eating each other’s shares?” Huinink finished with a strong message of hope for the airport and travel retail industries: “I think the future is bright. It has been an extremely rough year for the airport industry, for us as a company and for me personally. But I’m looking forward to the new normal, I want to go back to travel. I think that the consumer is ready. “Let’s be clear: passengers and consumers want to go back to the magic of travelling, want to go back to having a great experience. And that starts at the airport with great retail concepts, food and dining options. I’m very optimistic that things will come back once countries start to open, and travel will be in very, very big demand. “If you work at an airport you really want to see it buzzing again, because that was a great feeling. I would really like to see that feeling back as soon as possible.” Click on the video for the full interview.

Vancouver Airport Authority President & CEO Tamara Vrooman closed day four of the Summit of the Americas by sharing her insights into how the airport business will evolve post-pandemic. Vrooman was appointed CEO of YVR in July 2020 looked back at what has been a year of both crisis and opportunity. “When I joined, the pandemic was in full swing and it was eyes wide open for our sector,” she said. “I was previously the CEO of a large regional financial institution and helped the company recover from the financial crisis of 2008; so, I’ve had some experience leading a company through tumultuous times.” “A crisis is a terrible thing to waste,” she added. “We’re taking this opportunity to re-examine our business so that we can take the next steps forward.”

“Most people are equating safe with the readiness of vaccines and a reduction of quarantine measures. Once those conditions are in place, we forecast a quick and powerful return.”

Vancouver Airport Authority President & CEO Tamara Vrooman

Commenting on how this re-examination has shifted her priorities from the beginning of the crisis to present time, Vrooman said: “At our core, we are a people business. Our early priority was to support our people, passengers and partners and this has remained throughout. One of the key shifts, according to Vrooman, was a move away from brick & mortar and into digitalisation and revenue diversification. “Business and revenue diversification were already priorities, and that has continued, although with some turbulence, over the last year. We noticed a big shift of passengers’ individual preferences away from physical stores and into the digital realm and we had to rethink our offer to adapt to this.

A glassed-in island forest is the visual centrepiece of Vancouver International’s largest expansion project since 1996, the new Pier D

“Digitalisation is here to stay and we’re helping our retail and concession partners to make investments to adapt to the permanent shifts in how people shop.” Vrooman also gave an insight into how the pandemic has impacted YVR’s business. “Over the last few months, we’ve averaged 5,000 passengers a day. A year ago, that would have been 85,000 to 87,000 passengers a day. We moved from welcoming 26 million passengers annually, to becoming a 2-3 million passenger airport. That is a -90% decrease.” Despite the significant decrease in passenger numbers, YVR has committed to supporting its staff, retail and airline partners, no matter how difficult the situation. “From our service staff to our ground handlers, everyone is part of the family,” Vrooman said. “At capacity, we employ 26,000 people and we are committed to supporting those people and businesses. Making sure they have access to government programmes and negotiating individual terms have been a huge part of what our team have been doing in the last year.”

To give further support to its furloughed employees, YVR partnered with local governments to deploy airport staff to vaccination clinics, with huge success. “Airport staff are excellent at customer service and the project has been so successful, the government are asking us to deploy more. “It’s been a real boost in morale and truly demonstrated the value of our people when it comes to innovating and doing the right thing.” While YVR had to cancel some big infrastructure projects in the last year, it also took the opportunity to invest in other areas of the business. The company developed an accurate digital twin of the airport, which according to Vrooman offers endless possibilities. “The complete digital replica will help us plan better scenarios for when passengers eventually return,” she said. “It will help us use sensors and manage passenger flows more efficiently.” Despite the uncertainties in the global aviation industry, Vrooman is confident that travel will resume, and with force, once international restrictions begin to ease. She said, “We’ve been tracking passenger demand and there is a very strong intention to resume domestic business travel and international leisure travel as soon as its safe. “Most people are equating safe with the readiness of vaccines and a reduction of quarantine measures. Once those conditions are in place, we forecast a quick and powerful return.” So, where are the opportunities for airports and the wider aviation industry in the new landscape? According to Vrooman, it’s all about digitalisation and diversification. “We’re very excited in the interest around our airport as a logistics hub and the ability to build a diversified revenue stream to complement our airport business,” she said. “The land surrounding our airport is being eyed by Amazon, film studios and so much more because of the desire to be near our logistics hub. The data platform that will come from our airport’s digital twin will also bring significant opportunities that can benefit us and our partners. “Nobody builds an airport in and of itself,” she added. “We exist for the sole purpose of serving our community and the economy that supports it. We want to be the gateway to this new economy after the crisis.” Click on the video for the full interview.

*Registered delegates can continue to visit the Summit of the Americas, download digital assets from exhibitors and view the Knowledge Hub and Engagement Lounge sessions in the post-event ‘encore’ period that continues until 9 May, through this link.

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The Moodie Davitt eZine Issue 294 | 28 April 2021

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