No industry-wide bailout for airlines and airports, says UK government

‘This is apocalypse now and you must act fast,’ airline trade association warns

Helen Coffey
Wednesday 25 March 2020 11:32 GMT

Airlines and airports in the UK have been told there won’t be an industry-wide government bailout amid the coronavirus pandemic.

Chancellor Rishi Sunak wrote to aviation executives on Tuesday to say that he would only consider discussing measures to shore-up individual businesses as a “last resort”, and that this would be done on a case-by-case basis rather than applied across the board.

He repeated the package of measures announced on Friday that will be available to all British industries: postponing some rates and tax payments and paying the majority of employed staff members’ wages.

Sunak added that “taxpayer support would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors”. It comes after easyJet, among other airlines, continued to pay out dividends to shareholders, to the tune of £171m. The airline’s founder and largest shareholder, Stelios Haji-Ioannou, received £60m.

The lack of government bailout was met by shock and concern from some corners of the industry.

Chief executive of the Airport Operators Association (AOA), Karen Dee, said: “After having publicly announced a support package for airports and airlines, we’re surprised by where we find ourselves today. Our industry will now have to fight on its own to protect its workforce and its future.

“With passenger numbers approaching close to zero, UK airports have seen a major drop in revenue. They are taking unprecedented steps to safeguard airport staff and operations through this crisis, which could include in some cases considering shutting down for a period of time. This could have major impacts for UK communities and businesses.”

She added: “While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK Government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days.”

The AOA is calling on the government to “urgently reconsider” and set up an industry-wide package of measures.

Meanwhile, the European Regions Airline Association (ERA) is demanding that the European Commission, member states and their governments “act to provide the financial support needed to secure the very survival of our industry and Europe’s future economic growth and connectivity.”

Montserrat Barriga, ERA director general, said: “We need to ensure a comprehensive basket of relief measures are made available to the aviation industry, and that best practices are implemented across countries.”

IATA, the international trade association for airlines, has praised some governments for stepping into the breach and introducing a package of measures for the aviation industry, while calling on others to do more.

“My message to governments that have taken up this cause is to say thank you for leading,” said Alexandre de Juniac, IATA’s director general and CEO. “And keep watching the situation as it develops because we may need you to do more.

“My message to governments that are considering doing something is to hurry-up. Every day matters.

“For all the others, the potential for a $252bn fall in revenues is an alarm bell. This is apocalypse now and you must act fast.”

According to IATA’s latest analysis, released on 24 March, annual passenger revenues will fall by $252bn (£210bn) if severe travel restrictions remain in place for three months.

This represents a 44 per cent drop year-on-year, more than double IATA’s previous analysis of a $113bn (£91bn) revenue hit, which was predicted before countries around the world introduced strict travel bans.

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