MPs Urge the UK Government to Help Embattled Airlines

MPs Urge the UK Government to Help Embattled Airlines

  • Airlines say the aviation sector was “entering the danger zone”
  • 38 MPs wrote a letter to Chancellor Rishi Sunak, demanding help for UK airlines amid the coronavirus pandemic
  • Airline companies ask the government for emergency loans and tax suspensions

As many as 38 Members of Parliament (MPs) sent a letter to the UK Chancellor Rishi Sunak asking him to take measures to help airlines during the coronavirus crisis.

The airline companies have been pressuring the government for a targeted assistance package to help them recover from the crisis as travel demand plummeted.

Airline bosses applauded the MPs’ call and noted the sector was “entering the danger zone”. Calls for the government assistance are expected from Virgin Atlantic and other airlines.

However, Sunak said that airlines should seek help at other places rather than turn to authorities first.

In general, the airlines are asking for two things from the government. As the companies and airports are running out of money, they need emergency loans. Even though the demand for passenger flights has plummeted, airports plan to keep operating in order for cargo flights, repatriation flights, police, rescue, Royal Mail and others to keep running.

Keeping the airfield open involves high expenses. Also, despite the fact the airplanes are grounded, the companies still pay for their maintenance and parking.

Secondly, airlines requested from the government to suspend several taxes as well as regulatory changes.

To be more specific, the Civil Aviation Authority (CAA) is financed entirely by the aviation sector and they requested from authorities to pay for that cost, as well as Air Traffic Control charges until the end of the year. The companies also asked the government to suspend the Air Passenger Duty tax once when things go back to normal.

In their letter to Sunak, the MPs noted that the impact of the pandemic on UK aviation had been “severe and truly unprecedented”.

“Restrictions have all but eliminated airline and airport revenue, but not costs, which are substantial and go far beyond solely wages,” the letter said.

“It remains unclear what the duration of the economic impact will be on the UK’s airlines and airports, who face a pressing challenge to survive.”

The letter also highlighted the slump in global demand for travel, noting that markets that imposed heavy travel restrictions account for 98% of passenger revenues worldwide.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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