Should the government bail out the airlines? : CityAM

Should the government bail out the airlines? : CityAM


Is there a case for the UK government bailing out airlines in the midst of the coronavirus crisis?

YES, says Rob Burgess, editor of headforpoints.com, the UK’s biggest frequent flyer website. 

There are many reasons not to bail out companies — it is wrong to reward stupidity, bad management, corruption, or those who failed to adapt. It is ludicrous, for example, that Alitalia has had multiple bailouts over the last decade, even during good times. This is not the case here. We have the real risk of good businesses being forced to the wall through no fault of their own.  

If British Airways fails, what happens? No EU investor has the capital to buy its assets and keep the airline in one piece. Non-EU businesses cannot legally own a UK airline. The administrators would break it up, selling the long-haul Heathrow slots pair-by-pair to bailed-out foreign carriers. Easy connectivity with UK domestic flights would end. Marginal routes would disappear. 

Do we really want to be the biggest country in the world without a flagship national airline?  Once the Heathrow slots have gone, it would never be possible to recreate BA, even if the political will was there. 

NO, says Leo Murray, co-director at climate change charity Possible.

There is a familiar irony in airlines demanding bailouts due to the effects of a global crisis that they’ve played a major role in facilitating. Kensington & Chelsea, London’s ground zero for coronavirus, is also home to more frequent flyers than anywhere else. 

The aviation industry is a master of corporate welfare, exceptionalism and entitlement, refusing to either pay fuel tax or VAT like everyone else, or to conform to the UN Paris Agreement to limit global warming to levels human civilization might safely cope with in the decades ahead. Richard Branson and Michael O’Leary are delighted to fill their boots during times of plenty, but come crying for public handouts as soon as the chips are down. 

Laid-off aviation workers certainly need support, but airlines themselves can get to the back of the queue. Any state aid for Branson and pals must come, like the tiny violins they deserve, with strings attached: actual commitments to reduce (not offset) their greenhouse gas emissions in line with the science. 

Main image credit: Getty



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