Adam Ewart, CEO and founder of luggage courier company Send My Bag, shares his views with Globetrender about the future of the British aviation industry and how it might survive.
With Covid-19 now spread across more than 100 countries and every continent except for Antarctica, air travel has all but ground to a halt.
After reassessing coronavirus’s impact on the global economy, the International Air Transport Association (IATA) is forecasting that airlines will lose US$314 billion in revenue this year – almost three times greater than its original prediction in March of a “worst-case scenario”.
As a consequence of this dramatic downturn in passengers and revenue, it has been estimated that the majority of airlines will be bankrupt by the end of this month without government support.
In response to these apocalyptic predictions for the aviation industry, the US government announced a US$25 billion bailout for its beleaguered airline industry mid-last month. This will allow carriers, such as Delta and American Airlines, to continue paying salaries and benefits to employees for the time being.
Yet while our neighbours across the pond have acted to protect their aviation industry for the coming months, the UK government has taken a notably more withdrawn approach.
Instead, the Chancellor, Rishi Sunak, wrote to aviation executives in late March – the same day the Foreign and Commonwealth Office warned against all but essential travel – saying that measures to shore-up individual businesses would only be considered as a “last resort”.
Since this note was sent, we’ve seen numerous UK airlines state that they are close to collapse or taking drastic measures to stay afloat. Some airlines have received more support from the government than others – for example Easyjet secured a £600 million loan from the Treasury.
But with flights grounded by most airlines until early May at the soonest and many airlines facing the prospect of paying out long lists of refunds worth up to £7 billion, a more comprehensive package must be offered to protect the entire sector.
I urge the UK government to follow the US’s example, reconsider its position and step-in to save the British aviation industry.
In 2018, it was estimated that 341,000 people in the UK were directly employed by the aviation sector. Many of these are high skill, high productivity jobs and, despite the government’s job retention scheme, would likely become unemployed should the airlines be allowed to become insolvent.
These are people that the government cannot simply allow to become jobless as we face a coronavirus-induced recession.
The fall of the industry would not only mean vast job losses. It would also reduce transport links once restrictions are lifted and could permanently disrupt global logistics. We’ve already seen the issues that this could create following the collapse of Flybe in March.
Airports, such as Southampton and Exeter, lost over half of their scheduled departures overnight and local business leaders and politicians warned about the profound impact this sudden disconnection from national and international markets would have on the local economy.
The insolvency of multiple airlines in the UK would have a similar impact to Flybe’s collapse but on a national scale. Airports across the UK would become starved of arrivals and departures, holidaymakers would struggle to get to certain destinations and hundreds of British businesses would be unable to send goods around the world.
If too many airlines fail, the UK may also be left with a situation similar to the one currently facing Australia, in which Qantas has a monopoly over national air travel following Virgin Australia’s collapse into administration. This could mean price hikes, hitting consumers in their pockets at a time when they are already facing financial difficulties and are desperate to travel.
The UK government is trying its best to return society to “normal” post-Covid-19, but without a secure aviation sector, “normal” may no longer be a viable option. Further jobs will be lost, regions will be cut off from national and international markets, and global logistics will be disrupted – the UK government must urgently reconsider its position and pursue a bailout for the airlines to avert a wide-ranging disaster.
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