AUS
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UK
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IND
Summary
- The slump in air traffic has led to a significant increase in pay cuts and job losses in the industry
- Ryanair is going to shut its base at the Frankfurt Hahn airport as its German pilots refused the pay cuts
- British Airways, Lufthansa, American Airlines and United have urged the US and EU authorities to resume the transatlantic services.
- International and long-haul flights that have suffered the most due to border restrictions continue to stress several carriers today
The reduction in air travel due to the restrictions imposed to contain the Coronavirus pandemic has resulted in huge losses for the aviation industry. This has led to a significant increase in pay cuts and job losses as several flights have been grounded, leading to displeasure in staff and forcing several airlines to take tough decisions.
Ryanair to shut base at the Frankfurt Hahn airport
Though Ryanair is yet to disclose the details on the number of jobs that would be impacted by its plans for Germany, in May 2020, the airline had announced that it plans of 3000 job cuts across Europe. Recently, in order to minimize job losses, company’s UK staff, including pilots and cabin crew agreed to pay cuts. In Ireland, Ryanair management bypassed the union, and the pilots were made to agree with new conditions on an individual basis. In Austria, Ryanair announced the closure of the Vienna base of its subsidiary Lauda before doing a deal with some pilots to save it weeks later. One of the largest carriers in Europe, the Ryanair had stated that 70% of its pilots in Europe had agreed to pay cuts and other conditions.
This is one of the many cases reported in recent times from the aviation industry. In addition to job losses, the aviation industry faces challenges of restructuring, passenger refunds and quarantine policy. The sector raised concerns on the mandatory 14-day quarantine norm for all passengers arriving at the UK introduced on 8 June 2020, which was responded by the government later.
Bigger airlines plea to resume transatlantic flights
Industry players and experts had suggested a balanced approach to gradually restart the operations while remaining cautious about the spread of Coronavirus. Though each airline has its own routes that bring majority revenue share, international and long-haul flights that have suffered the most due to border restrictions continue to stress several carriers today.
To overcome this challenge, recently the heads of major national carriers including the UK’s British Airways, Germany’s Lufthansa, American Airlines and United teamed up to request the United States to resume the transatlantic services. The four biggest global airlines appealed to the US vice president, Mike Pence and Europe’s home affairs commissioner, Ylva Johansson, to start Covid-19 testing programme at the airports to curb the spread of Covid-19 and facilitate the planes to restart flights.
Fast and accurate testing for Coronavirus at the airports will avert the need for quarantine norms and travel bans. The plea stated that it would be an opportunity for the government and industry if they join hands to conduct the pilot testing programme for the transatlantic market. Present circumstances call for ways that safeguards the health of both passengers and staff and build confidence so that people start flying on the transatlantic route.
Opening of air travel between the US and Europe is important as the transatlantic air travel holds significant importance to both the global and European economy. Flights between Europe and North America are lucrative for the airlines as it considerably adds to their profitability. With relaxations in travel restrictions, several airlines resumed operations, but services to North America could not start as the US still struggles to control the spread of the virus.
Airports too face the challenge
Airports in the UK have taken a £4 billion hit from the impact of the coronavirus pandemic and have asked the prime minister, Boris Johnson, for a rescue plan, which includes relief on business rates, suspension of air passenger duty and an extension of the Government’s furlough scheme beyond October this year. Airports have till now recorded revenue loss of £2 billion, which is estimated to double by year-end.
Going by the estimates of International Air Transport Association (IATA), the lower traffic would result into a large portion of revenue loss for the airports, leading the operators to reduce cost.
Government support
In March 2020, the UK government had made a u-turn after discussing a sector-specific COVID-19 financial package stating that bail-out for the entire industry would not be available. The government asked the airlines to seek capital from the shareholders and lenders, save cash and make use of assets. However, individual companies could be looked at for rescue packages in the absence of generic financial support measures including furlough job retention scheme and absence of private commercial options. Recently, the Airport Operators Association (AOA) has called on the government to take strong measures to support the ailing aviation sector, with large-scale job losses expected across the country.
Future scenario
The recovery route for the industry seems to be a long journey. Though it is being predicted that the domestic travel would gain pace before business, leisure and holiday travel picks up. However, pay cuts cost-cutting measures and rise in unemployment would continue to impact the business, leisure, and holiday air travel in coming times. Traffic is not likely to see a major improvement in the coming time, and hence there is an urgent need to protect jobs in the aviation sector.
