Martin Vander Weyer Martin Vander Weyer

Now is not the time to throw money at airlines

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British Airways warns of 12,000 redundancies. Ryanair announces 3,000 job losses as ‘a minimum to survive the next 12 months’; Virgin Atlantic adds 3,000 more. The aero engine makers Rolls-Royce and GE talk of more than 20,000 job losses between them. Of all the sectors hard hit by pandemic, aviation is one whose prospects look blighted as far as the horizon. What should governments do about it?

Global trade will return to pre-crisis levels, but business travel may never do so: why would companies bear the risk and expense when video-conferencing is so cheap and efficient? Even if vaccines against Covid-19 are available by next year, international travel will be constrained by fear of the next virus. Health checks and quarantine rules will be the new normal for arriving passengers, as will hostility from locals even for travellers whose apps or passport stamps say they’re clean. The airport experience — Heathrow’s boss speaks of kilometre–long social-distanced boarding queues — will be grimly endured rather than relished as the duty-free opportunity it used to be. Millions of holidaymakers will lose the habit of going abroad.

All this looks bleaker today than it did when I argued in March that governments should not offer the instant bailouts airlines had begun to call for. I stand by that argument. As Michael O’Leary of Ryanair has angrily pointed out, survival prospects for European operators are already being distorted by ‘subsidy junkies’ such as Air France and Lufthansa ‘hoovering up state aid’ — while Spain lobs a billion euros into Iberia and Vueling, sister companies of British Airways in the IAG group.

But taxpayers’ money pumped in now may be wasted — because what will be needed in a few months’ time will be a far more radical reconstruction, at reduced scale, involving mergers of the strongest, and new ventures emerging from the wreckage of the old.

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