The wings are now falling off the aviation industry. Airlines have been begging for support and a lot of governments around the world, including in the U.S. and in Australia, are finding funds to help them. But airlines are not aviation — they are but one part of a bigger aviation ecosystem. We need to focus as much on the industry’s infrastructure as on the airlines. Arguably, it is more important, because regardless of your business model or fleet, you need safe and reliable airspace and airports.
The Australian government has announced a package of support for its airlines, worth AUD$715 million. But, and this is a big but, it is in kind. This package of aid is being delivered by way of waiving security screening costs at airports and more importantly, waiving the charges Australia’s air navigation services provider would normally levy for providing air traffic management services. Or, to put it simply, the work that AirServices Australia does to stop aircraft colliding. It delivers safe separation by managing the airspace and the areas around airport terminals. AirServices is a corporatized government entity, so as its only shareholder, the minister has made that decision, in these extraordinary times.
It will help Australia’s airlines, of that there is no doubt. The gift is backdated to the first of February, so will immediately inject AUD$159 million into the airlines, saving them much-needed cash. Between now and the end of the year it is estimated, in a normal year, to be worth AUD$750 million, but that assumes that the airlines keep flying in the first place. The impact on AirServices is more complex.
The situation is no better in Europe, except that there, it is not the European Commission that is dictating this behaviour onto the Air Navigation Service Providers, it is the airlines themselves. Taking the concept of State Aid into their own hands, the airlines are refusing to pay their outstanding charges – February’s charges are due on April 10.
We are talking about more than half a billion euros that airlines owe in charges that are not going to be paid. As a general comment, most Air Navigation Service Providers will have two or three month’s worth of cash on hand. About 80% of an ANSP’s expenses are salaries. Most of that is for the air traffic controllers and support staff that provide the day-to-day operations of keeping the skies safe.
But a combination of airlines not flying at all – Ryanair has just announced that it is grounding its entire fleet – and refusing to pay their outstanding obligations leaves the system with no cash coming in at all. Europe now has no aviation; it will soon have no infrastructure either.
If the money that is due to the ANSPs in Europe is not paid, it is very easy to imagine what happens next: Total meltdown. There will be no passenger aviation for a while, but much more importantly, you can forget about those flights carrying medical supplies, testing kits, masks or indeed food to where it is needed. There will be no aviation. There will be no need for airports either, of course. In fact, ‘meltdown’ risks being too gentle a word for what happens next.
Yesterday, I argued that now is the time for restructuring and reforming aviation, to not let a crisis go to waste. I did not understand that the firing gun was about to be fired this quickly and this dramatically. This needs rational thought and a considered approach. Circumstances are overtaking a rational and sensible approach. But we need it, nonetheless, as we rebuild.