UK falling behind major economies in supporting aviation industry

As the COVID-19 crisis grips the aviation industry ever closer, the Airport Operators Association (AOA) is today [Tuesday 31 March 2020] calling for the UK government to do more to support the UK’s aviation industry after it was revealed the UK government is falling behind other major economies in supporting its aviation industry.

Figures from IATA estimate that the UK could see 113.5m fewer passengers travelling through its airports in 2020 – a drop of more than a third compared to 2019, which saw 297m passengers according to figures released by the Civil Aviation Authority.

This news comes as countries across the developed world are stepping in to support their aviation industries:

  • In the US:
    • Airlines have access to US$58 billion, split evenly between loans and payroll grants
    • President Trump outlined $10 billion in support for US airports, including $100m for general aviation (GA) airports. This can be used by airports for any purpose ‘on which airport revenue may lawfully be spent’.
  • In Australia, AU$715 million relief package for Australian aviation industry, involving the refunding and ongoing waiving of a range of government charges on the industry including aviation fuel excise, air services charges on domestic airline operations and domestic and regional aviation security charges. There will be an upfront estimated benefit of AU$159 million to Australian airlines for reimbursement of applicable charges paid by domestic airlines since 1 February 2020.
  • In Norway:
    • The Government is fully compensating airports for the loss of airport charges
    • The Government has suspended the air passenger tax (equivalent to UK Air Passenger Duty) until 13 October
    • A domestic airline receives NOK40 million (£3.1 million) per month to maintain critical routes until further notice
    • The state offers loan guarantees of NOK6 billion (£472 million) to airlines registered in Norway
  • In Spain, a credit line of up to €400 million for the travel sector, granted by the state-owned Credit Corporation
  • In France, the Government has set out €700 million of tax aid to airline sector.
  • In Denmark & Sweden:
    • Joint state-backed credit guarantees worth a total of SEK3 billion (£243 million) to enable airline SAS to borrow money on the commercial market.
    • In Sweden, Swedish airlines are offered credit guarantees worth a maximum of SEK5 billion (£415 million), of which SEK1.5bn is for SAS
    • In Denmark, DKK1.5 billion (£184 million) to cover travel cancelled due to COVID-19
  • In Finland, the government has agreed to provide a state guarantee of €600 million to assist the national carrier

Chief Executive of the Airport Operators Association Karen Dee said:

“As an island nation, we are reliant on aviation to facilitate our trade and to enable businesses and consumers to travel domestically and internationally. More than half the UK population flew at least once last year and 40% by value of our non-EU trade travels by air. More than a million people are employed directly or indirectly in aviation, and many more jobs rely on our sector.

“Yet the UK Government is lagging behind its international competitors when it comes to safeguarding our vital industry for the future. Aviation was at the forefront of the impact of COVID-19, but we appear to be at the back of the queue when it comes to Government providing targeted support.

“As passenger volumes approach zero, airports are downscaling operations across the UK and in some cases have announced temporary closures. Without passengers, an airport cannot run sustainably – yet it is vital for lifeline services, freight and other critical services such as post, search & rescue and maintenance and operation of offshore wind and North Sea oil & gas that airports stay open.

“Other countries have recognised this – it is time for the UK Government to step up to the plate.”

IATA’s Regional Vice President for Europe Rafael Schvartzman said:

“The air transport industry is an economic engine, supporting up to 12.2 million jobs across Europe and $823 billion in GDP. Every job created in the aviation industry supports another 24 jobs in the wider economy. Governments must recognize the vital importance of the air transport industry, and that support is urgently needed. First, this will keep airlines financially viable during the present lockdown, preserving jobs, maintaining essential connections to repatriate citizens, and carrying life-saving air cargo supplies. Secondly, this would avoid broad economic damage by ensuring that airlines can rapidly scale-up operations when travel restrictions are lifted, jump-starting the European and global economies.”