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Coronavirus: Airlines lobby Sunak over prolonged ‘cash crisis’ | Business News

By April 26, 2020 No Comments
LONDON, ENGLAND - MARCH 16: A British Airways flight takes off as a Virgin Atlantic aeroplane waits at terminal 3 of Heathrow Airport on March 16, 2020 in London, England. As the coronavirus pandemic continues to gather pace, travel companies and airlines have seen a slump in demand, forcing them to lay off staff and cut flights. British Airways owner IAG has announced that it will cut capacity by around 75% over coming months as the company fights heavy losses in demand. (Photo by Leon Neal/Get

Britain’s airline industry is urging ministers to further extend government emergency wage subsidies, warning that it will face a continuing “cash crisis” as demand takes months to recover from the COVID-19 crisis.

Daily Week News has seen a letter sent on Friday by Tim Alderslade, chief executive of Airlines UK, asking the Treasury to provide certainty for its members about the ongoing operation of the Coronavirus Job Retention Scheme.

In it, Mr Alderslade told Rishi Sunak, the chancellor, that if the scheme is “withdrawn prematurely, carriers experiencing only a tentative revenue recovery will face a renewed cash crisis”.

“We believe that the scheme will need to be extended beyond June, and that consideration should be given to measures – including a ‘tapering’ of the scheme or a review on a sectoral basis – to avoid aviation facing a cliff-edge post-June, whilst services are scaled-up.”

The Airlines UK letter was sent amid ongoing deliberations by the Treasury about the provision of taxpayer support to the aviation industry.

Carriers have already called for additional help from the government on regulatory and air traffic control charges.

Mr Sunak has said that the government will only consider bailing out individual carriers “as a last resort”, dealing a blow to airlines including Virgin Atlantic Airways.

The chancellor has, however, already extended the job retention scheme by one month and signalled his openness to doing so again.

Industries such as aviation are particularly keen for it to be in place for as long as possible, because the uncoordinated international lifting of lockdown measures is likely to play a part in delaying the recovery of international air travel.

“Research by IATA [the International Air Transport Association] has shown that a substantial number of travellers are likely to delay a return to travel, and a majority could wait until they have greater certainty around their own personal finances,” Mr Alderslade wrote.

“There is early evidence of this trend in the Chinese and Australian markets, where domestic demand has continued to deteriorate or remain at substantially reduced levels even after the rate of new infections has fallen significantly.”

The comments in Mr Alderslade’s letter echo those of Stewart Wingate, the boss of Gatwick Airport, who said last week that it could take four years for passenger numbers to return to pre-coronavirus levels.

Airlines UK also told Mr Sunak that it welcomed the establishment of a ‘Restart and Recovery’ unit within the Department for Transport.

“This work will also examine economic and policy measures to support the sector, and we remain clear that further such measures will undoubtedly be required to get UK aviation back on a competitive footing and to maintain its critical role in the UK economy and as the third-largest aviation market in the world,” Mr Alderslade wrote.

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