Airlines call on government to underwrite industry charges

Airlines have called on the government to underwrite hundreds of millions of pounds in regulatory and air traffic control charges as they seek to navigate through the escalating coronavirus crisis.

Sky News has obtained a letter sent on Wednesday by Airlines UK, the industry’s main lobbying group, to Grant Shapps, the transport secretary, in which it calls again for a package of emergency support.

In the letter, Airlines UK urged the government to suspend – rather than defer – air passenger duty payments for six months following the end of the COVID-19 pandemic.

It called for the waiving of air traffic control (ATC) and Civil Aviation Authority (CAA) charges for the whole of 2020, “with payments guaranteed by [the government] so National Air Traffic Services and the CAA can continue to be paid and function as critical enablers of the wider UK aviation landscape, both through the current crisis and then into the recovery phase”.

Airlines UK, whose members include British Airways, easyJet, Ryanair and Virgin Atlantic, also repeated a call for a moratorium on all litigated claims under EC261, the European law which requires airlines to refund passengers for cancelled flights.

“Carriers should also be permitted to issue vouchers instead of refunds and, should refunds be required, carriers should be permitted to defer payment until the crisis period is over and as defined by air traffic volumes, rather than time period,” the group said.

The letter from Airlines UK comes a day after Rishi Sunak, the chancellor, told British carriers that they could expect to engage in discussions with the government about “bespoke” aid “only as a last resort”.

Mr Sunak said airlines would need to exhaust the resources of their existing shareholders and financial stakeholders before the government would consider an injection of debt or equity.

Tim Alderslade, Airlines UK chief executive, said: “A million people work in UK aviation all over the country.

“It is one of the UK’s international assets, as the third largest globally behind only China and the US.

“We welcome that the Government will enter into negotiations with individual airlines, but we also want to work with them on policy actions that could be taken now which could also have a considerable impact.”

Mr Alderslade added that airlines welcomed Mr Sunak’s confirmation that the government would be prepared to enter talks with individual airlines about “bespoke support”.

The latest industry data suggests that aggregate passenger revenues will fall globally by $252bn as a result of the virus outbreak.

Markets with severe travel restrictions now cover 98% of global passenger revenues, Airlines UK said.

Mr Alderslade also urged Mr Shapps to provide more detail about the Coronavirus Job Retention Scheme unveiled by Mr Sunak late last week.

“Please can we urge that further clarity is provided as soon as possible owing to the severe cash pressures that airlines are facing,” he wrote.

Mr Sunak’s comments held open the possibility that the government could take a stake in some British airlines, but underlined the remoteness of such a prospect.

The Treasury is keen for major airline shareholders such as easyJet’s Sir Stelios Haji-Ioannou and Virgin Atlantic’s Sir Richard Branson to inject further sums before they can turn to the government for more support.

Mr Sunak also hinted that the Treasury was close to unveiling a further credit facility for companies which do not have an investment grade credit rating.

“I have listened to feedback that suggests some companies including airlines are uncertain whether they can access this Facility – which is for companies rated as investment grade or equivalent,” he wrote.

“I am in discussions to resolve this uncertainty and further announcements will be made shortly.”

Sky News revealed last week that Rothschild, the investment bank, had been asked to advise ministers on a package of measures, and that one option could include direct taxpayer investments in airline shares.

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