‘Get­ting planes up in the air is key to coun­try’s sur­vival’

Air­port and air­line bosses say quar­an­tine mea­sures are in­ef­fec­tive and help is needed, writes Si­mon Foy

The Daily Telegraph - Business - - Business -

Heathrow’s chief ex­ec­u­tive John Hol­landKaye is such a pro­po­nent of test­ing for coro­n­avirus at air­ports that he has gone to the trou­ble of get­ting in­volved in rapid test tri­als him­self.

Hol­land-Kaye, who is lead­ing the charge to get blan­ket quar­an­tine re­stric­tions re­placed with mass test­ing, has taken ex­per­i­men­tal Covid tests that de­liver re­sults within 20 sec­onds, and says the new tech­nol­ogy could be a game changer for the be­lea­guered in­dus­try. “This is about the sur­vival of the coun­try,” he says. “Un­less we have test­ing in place to open up some of those long-haul mar­kets, the UK econ­omy is go­ing to be stuck in a low gear – that’s just not sus­tain­able.”

While other sec­tors emerge from the worst of the cri­sis, the avi­a­tion in­dus­try re­mains a shell of its for­mer self as the reim­po­si­tion of travel re­stric­tions and strin­gent quar­an­tine mea­sures across Europe con­tinue to ham­mer de­mand.

In­dus­try lead­ers are at a loss as to why the Gov­ern­ment ap­pears to be leav­ing the sec­tor out in the cold, and warn that the re­cov­ery from the pan­demic will be slow and painful.

But, ac­cord­ing to Hol­land-Kaye, test­ing at air­ports is one way to by­pass the sweep­ing quar­an­tines and, in turn, boost de­mand for air travel from cur­rent lev­els.

The UK’s trade com­peti­tors such as Ger­many and France have been test­ing pas­sen­gers at travel hubs for months, and Heathrow’s boss says switch­ing to a mass test­ing regime at air­ports would be a “very easy change” for the Gov­ern­ment to make and would get peo­ple fly­ing again.

Heathrow has in­vested mil­lions of pounds to es­tab­lish its own test cen­tre at Ter­mi­nal 2, but even its chief ex­ec­u­tive ad­mits that a sys­tem us­ing stan­dard swab tests is “quite a man­ual process” and can in­volve high costs and long wait­ing times.

That is why Hol­land-Kaye is hop­ing rapid tests be­ing tri­alled at Ox­ford and Manch­ester uni­ver­si­ties can win reg­u­la­tory ap­proval and be rolled out be­fore a vac­cine is found.

Although air­line bosses are less con­vinced that test­ing at air­ports is the best way for­ward, they are equally scathing about the in­ef­fec­tive­ness of the cur­rent quar­an­tine re­stric­tions and the in­con­sis­ten­cies in ap­pli­ca­tion from coun­try to coun­try.

Dara Brady, Ryanair’s mar­ket­ing chief, points out that he can cross the bor­der into North­ern Ire­land and be told that it’s safe to travel to Por­tu­gal, but when he re-en­ters the Repub­lic, au­thor­i­ties say it is un­safe to do so.

‘How does it make sense to give money back to a sec­tor that is boom­ing like su­per­mar­kets when other sec­tors are dy­ing?

“There is no sci­ence to that de­ci­sion at all,” he says. Bosses at easy­Jet, Wizz Air and Ryanair say there are pock­ets of pent-up de­mand in the mar­ket, but it is the thought of hav­ing to self-isolate for two weeks on re­turn that is hold­ing cus­tomers back.

Johan Lund­gren, easy­Jet’s chief ex­ec­u­tive, cites Por­tu­gal as the per­fect ex­am­ple. When it was re­moved from the UK’s “red list” last month, ticket sales “went through the roof ”, he says. “When there is re­lief from the re­stric­tions, de­mand is def­i­nitely there.” How­ever, to demon­strate just how change­able the sit­u­a­tion is, Por­tu­gal’s travel cor­ri­dor with the UK now looks set to be scrapped af­ter less than two weeks, leav­ing air­line bosses scratch­ing their heads about where to al­lo­cate re­sources.

Ryanair has al­ready cut ca­pac­ity for the au­tumn by a fifth – a move that shows it “ba­si­cally read the sit­u­a­tion wrong” ear­lier in the sum­mer, ac­cord­ing to Lund­gren – and with the loss-mak­ing win­ter sea­son just around the cor­ner, in­dus­try lead­ers now be­lieve they need more help to weather the Covid storm.

Easy­Jet has taken sev­eral mea­sures to shore up its bal­ance sheet, in­clud­ing tap­ping share­hold­ers for cash, leas­ing back planes and util­is­ing the Bank of Eng­land’s Covid Cor­po­rate Fi­nanc­ing Fa­cil­ity.

Lund­gren now wants the Gov­ern­ment to step in and tem­po­rar­ily re­move air pas­sen­ger duty (APD) to bol­ster car­ri­ers’ fi­nances while rev­enues re­main de­pressed.

“APD is one of the high­est taxes in the world of avi­a­tion. It costs us hun­dreds of mil­lions of pounds ev­ery year. If you want to sup­port the in­dus­try and in­cen­tivise con­nec­tiv­ity, a tem­po­rary re­moval of APD would be a strong mes­sage,” he says. He adds that the car­rier can­not con­tinue to take on “more debt and debt and debt” be­cause it means it won’t be able to in­vest for the fu­ture. Hol­land-Kaye, on the other hand, says an ex­ten­sion of the fur­lough scheme for avi­a­tion work­ers is some­thing the Trea­sury should look into, while crit­i­cis­ing the state sup­port given to other sec­tors.

“The UK gov­ern­ment has done noth­ing for the UK avi­a­tion sec­tor,” he says. “At the same time it has helped other sec­tors that are in far less of a cri­sis. Su­per­mar­kets have been given re­lief from busi­ness rates, which for a big su­per­mar­ket like Sains­bury’s or Tesco is worth over £500m a year.

“Tesco has just an­nounced that they’re hir­ing 16,000 peo­ple, which is fan­tas­tic news, but at the same time the avi­a­tion sec­tor is cut­ting jobs and we’ve had no re­lief at all, even on busi­ness rates. How does it make sense to give money back to a sec­tor that is boom­ing like su­per­mar­kets, when other sec­tors such as avi­a­tion are dy­ing?”

The deep jobs pain al­ready felt in the in­dus­try could also get much worse with­out any re­lief when the jobs re­ten­tion scheme ends in Oc­to­ber. Stephen Fur­long, an an­a­lyst at Davy, says you only have to look at car­ri­ers in the US that have re­cently pro­longed the fur­lough pe­riod for tens of thou­sands of staff to get a sense of how bad things could get. “It’s pretty bleak,” he says.

Hol­land-Kaye has al­ready slashed nearly a fifth of Heathrow’s staff and wants to avoid more cuts, but says he can­not rule out swing­ing the axe again. How­ever, Ryanair’s Brady says Europe’s big­gest air­line will most likely cut fewer than the 3,000 roles it ini­tially flagged in May. Fur­long says that’s “prob­a­bly be­cause they have one eye on a growth agenda”.

Ev­ery cri­sis pro­duces win­ners and losers, and Wizz is look­ing to buck the trend and use its low-cost base to strike when many of its com­peti­tors are on their knees. Over the last three months, the Hun­gar­ian air­line has an­nounced plans to open 10 new bases across the con­ti­nent, in­clud­ing at Lon­don’s Gatwick.

Its ef­forts are be­ing frus­trated, how­ever, by the sus­pen­sion of a rule that forces in­cum­bents to re­lin­quish land­ing slots if they fail to use them 80pc of the time.

Chief ex­ec­u­tive József Váradi says: “The slot waiver is a hugely dis­tortive mea­sure on the mar­ket and it un­der­mines a level play­ing field and pro­tects the in­ef­fi­cient from the ef­fi­cient.

“Look­ing at it from a Gatwick per­spec­tive, we are one of the few air­lines that could ex­pand and bring more ca­pac­ity, bring more ser­vice, bring more em­ploy­ment to Gatwick and the Bri­tish econ­omy, but we are un­able to do that be­cause of air­lines sit­ting on the slots.” Wizz an­nounced plans yes­ter­day to park parts of its fleet through­out the win­ter.

Fur­ther con­sol­i­da­tion in the sec­tor is in­evitable, says Fur­long, and prices are likely to re­main low for some time as car­ri­ers with bet­ter liq­uid­ity use dis­count­ing to at­tract pas­sen­gers.

But with the in­dus­try still in the eye of the virus-in­duced storm, Lund­gren says the Gov­ern­ment needs to act now to pro­vide sec­tor spe­cific sup­port.

“Time is lit­er­ally run­ning out,” he says. “Af­ter all, it is due to gov­ern­ment re­stric­tions that we can­not fly to the ex­tent that we see that there is de­mand for. That’s the rea­son why we are mak­ing th­ese calls.”

A worker sani­tises El Do­rado air­port in Bo­gota, Colom­bia

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.