The chancellor has promised special measures to help the aviation industry to weather the coronavirus crisis, after major airports said they would have to close down operations if they didn’t get support and airlines warned of imminent bankruptcies.
Rishi Sunak said he was discussing a specific package of help for airports and airlines with the transport secretary, Grant Shapps, as part of the £330bn made available to keep the economy afloat during the crisis.
Virgin Atlantic, which on Sunday called for up to £7.5bn for UK airlines, said it welcomed the “unprecedented level of support” for a sector which was “facing the biggest crisis in its history”.
EasyJet’s chief executive Johan Lundgren said the announcement was “very welcome”, adding: “Airlines are facing significant pressure and without government action there is a real risk to the industry.”
Unions and airports urged that the details of the package be released and measures implemented swiftly.
The UK-based Airport Operators Association (AOA), which had warned that some airports hubs could go out of business within weeks, earlier called for the immediate suspension of taxes and business rates as well as the provision of emergency financing, as passenger traffic through airports has plummeted.
Heathrow, Gatwick and Manchester airports had also signed a joint letter to the prime minister warning that they may “have to close passenger facilities and halt operations” and that hundreds of thousands of jobs were “instantly at real risk”. Heathrow, Britain’s biggest airport, employs 70,000 people directly.
The call came as the International Air Transport Association (Iata) said that only about 30 of more than 700 airlines operating commercial flights around the world were likely to survive the next few months without help.
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European members of the Airports Council International (ACI) wrote to ministers to request a continent-wide response to the crisis, noting that EU, UK and EEA airports have had 100 million fewer passengers than expected in 2020.
In Italy, where measures to combat the outbreak were initiated within Europe, passenger traffic was down by 90%, ACI said. Across the continent, numbers were 54% lower last week (9-15 March), after a 24% drop the previous week, with the situation rapidly deteriorating.
Flight cancellations on back of coronavirus crisis – your rights
Thousands of passengers left stranded abroad by cancelled flights are not being told that they are entitled to their rerouting costs, consumer groups have warned.
Normally when an airline starts cancelling, passengers are entitled to EU compensation of €250-€600 (£230-£550). However, where the cancellation is deemed to be an “extraordinary circumstance” – something outside the airline’s control, such as coronavirus – then the rules do not apply.
However, passengers stranded abroad by the cancellation in the EU – or due to travel home on an EU carrier – are entitled to rerouting, or to have their alternative travel costs refunded.
Thousands of air passengers have found themselves on the wrong side of cancellations – particularly in Spain but also in places such as Morocco and Poland. If your flight is cancelled, passengers can ask the airline to be rerouted on to an alternative flight, if that is possible, or to pay for a train or coach replacement.
This applies all flights that start in the UK, EU, Iceland, Norway or Switzerland or flights that arrive in these countries if you are flying on a UK/EU-based airline.
The airline does not have to pay if the passenger chooses instead to receive a refund of the return flight’s cost. If it is possible to get home, passengers are advised to take the rerouting option. Passengers making their own way home should keep all receipts and keep accommodation and other costs “reasonable”.
In practical terms, passengers are having to fend for themselves, as it is all but impossible to get hold of airlines. Passengers trying to call British Airways on Friday described how it was impossible to talk to anyone – and that was before Donald Trump extended the US flight ban to include the UK and Ireland.
The bigger problem may well be getting the airlines to pay up. They have been reluctant to pay rerouting costs in normal times, let alone in the current climate. Ultimately, it remains to be seen whether they will still be in business to pay out, given that many are saying they are unlikely to survive without state help.
As a result, some travellers will likely find themselves relying on travel insurance, where their policy allows for travel disruption.
This is mostly offered by better, more expensive policies. Where the passenger used their credit card to book the flight – directly – with the airline, they may be able to hold their card provider responsible for their extra travel costs – if the flight costs more than £100 – and the airline refuses to pay.
Ultimately, the UK government may have to step in to repatriate large numbers of Britons stuck in places such as the Canary Islands or Morocco, where alternative travel is near impossible.
Passengers on package tours are better protected. Ski customers in France on package trips should be repatriated by the tour operator – and if the firm ceases to exist because it goes bust, the Civil Aviation Authority. The CAA would have to fund emergency repatriation flights, under the terms of the Atol protection. It is a similar story for any cruise passengers stuck abroad.
Rory Boland, the editor of Which? Travel, said: “This is a difficult time for travel operators and airlines but too many people are being given no information at all or poor advice that could risk them being left hundreds of pounds out of pocket. Airlines and operators must ensure they are informing customers of how they will get people home and, where appropriate, how they can claim for additional costs they’ve incurred, such as overnight accommodation.”
The AOA chief executive, Karen Dee, said: “Governments across the world are supporting their national aviation industries, as many parts of the global travel industry have come to a halt. We are clear that airports will shut down in weeks unless urgent action is taken to support the industry.”
Dee said airports were taking immediate and drastic action to cut costs but the government would need to provide additional support through financing, guarantees, grants and tax relief.
London Gatwick, the UK’s second largest airport, announced on Tuesday it would cut 200 temporary jobs, end night flights and cut executive pay, as part of a package of measures to protect the business. Gatwick’s chief executive, Stewart Wingate, warned that “other serious measures are likely”.
Wingate said: “Gatwick is a resilient business, but the world has changed dramatically in recent weeks and we have been forced to take rapid, decisive action to ensure that the airport is in a strong position to recover from a significant fall in passenger numbers.”
After the US banned visitors from the UK and travel restrictions were put in place in Europe and beyond, Gatwick had just 238 flights scheduled to depart on Tuesday, about a third of its peak capacity.
On Monday, MAG, the owner of Manchester, London Stansted and East Midlands airports, said it would be taking measures including reduced working hours, temporary pay cuts and temporary layoffs. Its chief executive, Charlie Cornish, said the government needed to help the industry to “make sure it is still there and ready to help the economy recover once this is all over”.
ACI Europe said Europe’s airports had lost €2bn (£1.8bn) in revenue for the first quarter, even before factoring in the Schengen entry ban, and losses would deepen in the coming months.
It said some had closed terminals and would shut down all operations, “bracing for a near total collapse of their traffic, connectivity and revenues”.
With many big airlines preparing to ground most of their fleets, Iata warned that most carriers were in danger of bankruptcy.
Its chief economist, Brian Pearce, said: “The top 30 airlines have reduced their debts – but the vast majority still have high levels of debt, which means there are fixed obligations even in the absence of revenues.
“Some 75% of airlines we looked at had less than three months of cash to pay fixed costs … the median had two months of cash at start of year.”
Those reserves were largely spent, Pearce indicated, and travel restrictions were expected to last at least until the end of May.
A separate report from the Centre for Aviation says most airlines could go bankrupt by May. Iata’s director general, Alexandre de Juniac, said that “it was logical” to infer that conclusion.
De Juniac said a large amount of cargo capacity in the belly of passenger planes would also be lost – space typically used for high-value goods as well as fruit and vegetables. Grounding flights would also mean “less critical availability for medical equipment, medical staff or technical people to fight the virus”.
He urged “strong and swift” action from governments, adding: “We realise airlines are not the only sector impacted … But if we want this crisis to come to an end fast and quickly from an economic standpoint, the need for a strong airline sector to provide the resources to transport business people, goods and tourists is absolutely critical.”
Less than two weeks ago Iata said in its worst-case scenario, airlines would lose $113bn (£93bn) in revenues in 2020. Pearce said: “We’re already there and beyond … they are clearly worse than this.”
At the start of the year, Iata had forecast an aggregate $29.3bn global profit for airlines this year. Asked to update, Pearce said: “At the moment we’re concerned that large parts of the industry might not be there.”
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