Failures appear inevitable without government help. Ian Taylor reports
UK airlines have ratcheted up calls for government financial aid, warning that UK-wide measures to support business, pay staff wages and guarantee £330 billion in credit “will not be enough”,
In a letter to the Chancellor signed by almost 40 MPs, Airlines UK and the Airport Operators Association (AOA) called for “liquidity support where necessary, cost alleviations on a range of taxes and industry charges, [and] regulatory easements”.
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They urged: “Airlines, airports . . . travel retailers and ground handlers have made clear the support they need. The government should review these measures urgently.”
The call came as easyJet grounded its entire fleet and revealed it is in “ongoing discussions with liquidity providers” at the start of this week.
British Airways suspended all Gatwick operations and airport ground handlers Swissport, WFS, Dnata and Menzies warned they are close to collapse.
Virgin Atlantic was this week seeking “hundreds of millions” in government-secured loans, with other airlines poised to follow suit after Chancellor Rishi Sunak ruled out hopes of a sector-wide bail-out but pledged to consider “bespoke support as a last resort” for individual carriers.
Last resort
Sunak made clear support would depend on carriers “having exhausted other options” and “terms would be structured to protect taxpayers’ interest”.
An industry source noted: “The Chancellor’s statement wasn’t the level of help that had been suggested.”
However, Airlines UK policy and public affairs director Rob Griggs said: “We’re very much still in dialogue. The government is open to more support.
“There are a number of things on the table to carry airlines though this crisis and to support aviation when it is over.
“We’re talking to government as a sector, and individual airlines are having discussions of their own. We do need more to make sure as many airlines as possible get through this in as good a shape as possible.”
Iata called for “urgent action” warning UK airlines would be the worst hit in Europe, with passenger traffic across Europe forecast to fall by almost half on 2019.
UK carriers alone could see 114 million fewer passengers year on year and lose almost $22 billion in revenue, Iata warned.
Griggs pointed out: “The Iata figures show the UK is most impacted.”
However, the scale of UK aviation and level of competition among airlines makes a government bail-out challenging.
Competition questions
Aid to one carrier is likely to trigger demands from rivals or legal challenges on competition grounds.
The Chancellor’s letter to the sector last week noted any support would “have regard to . . . a thriving competitive aviation sector . . . and equitable treatment across businesses”.
An industry source confirmed the government was tussling with “the complexity of the competition in the UK, with a whole network of competing, privately owned airlines and airports”.
A second source told Travel Weekly: “Competition is behind the fact that the government is looking to have one-on-one conversations with airlines.
“There are complications around individual airlines and around liquidity.”
Dale Keller, chief executive of the UK Board of Airline Representatives (BAR-UK), said: “The Chancellor has indicated there could be more measures to come. But we appreciate the government has 101 sectors to deal with.”