25th March, 2020
Coronavirus may prove to be the biggest shock ever seen to the aviation industry. Some airports could close, while airlines are cutting services by 80% or more as a result of travel restrictions and are talking about imminent bankruptcies.
Virgin Atlantic, whose majority shareholder is billionaire Richard Branson’s Virgin Group, is understood both to have requested a government bailout of the airline and to have asked its staff to take 8 weeks of unpaid leave. The Airlines Operators Association has called for a package of measures including suspension of business rates and regulatory costs, airlines want an APD holiday and air traffic control charges frozen, and Unite the Union has called for part nationalisation of the industry, and subsidies for certain routes.
The drop off in aviation activity has already meant a reduction in aviation pollution. Fewer planes mean less noise and a dramatic reduction in emissions. Flights departing the UK emit around 100,000 tonnes of CO2 per day, so a reduction in flights of 80% would reduce emissions by around 80,000 tonnes of CO2 for every day that measures are in place. Yet for those impacted by or particularly at risk from the virus, and for those, including airport and airline staff, facing an uncertain future and economic hardship, these are extraordinary and difficult times.
How, then, should the Government respond? The situation, in terms of how long restrictions are likely to be in place, and what the UK and other governments will do in response, is changing daily. It is right for aviation activity to be curtailed to limit the spread of coronavirus between countries. Possible financial support and possible bailouts for the industry are currently being negotiated. Here are our thoughts so far on this:
Financial support must be targeted at workers, not airline shareholders
Many staff within the aviation industry will, along with those in many other sectors, be facing sudden loss of income and potential redundancy. The Government should keep under review what extra financial support they may need during the crisis. This should be designed as far as possible to directly benefit staff and not to bail out airline or airport businesses.
The Government should resist aviation exceptionalism
In his statement on measures to be implemented in response to the virus on 17th March Chancellor Rishi Sunak singled out aviation as likely to need a special package of support, alongside the wider offer being made to UK businesses. Aviation as an industry has long been given special treatment, including exemptions and exclusions from a raft of environmental policies and regulations over the decades. We think it’s time to think differently about this.
In terms of the sector’s economic significance or otherwise, as head of the International Energy Agency Fatih Birol has pointed out in the context of government rescue plans being drawn up around the world, “Aviation represents 1% of the global economy but it’s 8% of global oil consumption”. Passenger air travel is a service used by only half of us in any given year in the UK, and even then, most likely for leisure (over 70% of trips are for holidays). Any ‘special’ considerations should instead , surely, be focused on providing the goods and services we use and need every day. And while it is true that airlines will be hard hit by Covid-19, so too will other sectors. It’s hard to see why aviation should be given preferential support compared with, for example, hospitality, leisure or retail.
Perhaps, in fact, the Chancellor has come to a similar view. It’s being reported in the media that Rishi Sunak has written to the industry to say there would be no sector-wide rescue to prevent companies going out of business, and that further taxpayer support for the sector would only be possible once they had exhausted other options including raising money from shareholders, investors and banks.
Recovery plans should focus on building a sustainable future
Before the Coronavirus outbreak, a different crisis had started to make headlines, one with its own communities of vulnerable people, and its own threats to health and security. The impacts of Covid-19 are already proving brutal, but the climate crisis is likely both to be more complex to tackle and to have longer lasting impacts. Just before the virus hit in the UK, we had the historic court ruling that the Government’s approach to Heathrow expansion had failed to consider the Paris Agreement on climate change, and we’d started to see evidence of shifts in the public and political mood around aviation that were opening up conversations about growth, demand and the place of aviation in a zero carbon future. A government consultation on this had been imminent.
We can’t let the Government drop the ball on climate change. To quote Fatih Birol again, “This is a historic opportunity for the world to, on one hand, create packages to recover the economy, but on the other hand, to reduce dirty investments and accelerate the energy transition.” In planning short-term measures such as bailouts, guarantees and tax cuts, politicians need to stay focussed on the longer-term goals of decarbonisation and public wellbeing. Industry loans or moves for Government to buy out parts of the industry must not, for example, lock in incentives to deliver levels of aviation activity that are fundamentally unsustainable. Any financial measures that appear designed to boost aviation demand, such as the removal of Air Passenger Duty (a tax levied not on airlines but on passengers) cannot be justified, even if they apply only once flight restrictions are lifted, as argued for by the AOA.
In terms of jobs, in future, we need more people to be working on zero carbon fuels, carbon capture and storage, railways, and domestic tourism and the Government’s plans need to keep this bigger picture in mind.
What lessons can we take from people’s response to this situation? The current reality – fear, people staying isolated in their homes and avoiding contact with people outside their own family, small businesses failing and streets deserted – is a world away from the vision of personal wellbeing, and of strong and active local communities that motivates many environmental campaigners. But perhaps there is some hope to be drawn from the fact that governments have acted quickly (if, some argue, not quickly enough) to deal with a global emergency despite economic consequences. Populations have been ready to make enormous sacrifices (alongside some examples of selfish panic buying) for the wellbeing not just of themselves and their families but of people who are more vulnerable. It’s become socially unacceptable to put other people at risk, we’re trying to work out who our neighbours are and how to be neighbourly, and people who have never taken part on online meetings are learning how they work.
How much of this will stick, and how the aviation sector in particularly is impacted in the longer term is hard to predict. We don’t yet know how far the Government will yield to the demands of the AOA to do “whatever it takes to sustain the UK aviation industry”. Some anticipate mass airline closures and bankruptcies, others argue that the industry typically recovers – and resumes its upward CO2 trajectory – faster than expected. Let’s hope that by the time the UK emerges from this horrible crisis we’ll have had the opportunity, during the slowdown in global CO2 emissions, to ourselves slow down and think about the kind of future we want, collectively, to rebuild.