State aid debate at heart of uncertain future of aviation after pandemic | Company | German economic and financial news | DW
For Marc, a young pilot flying with a European national flag bearer, one of the strangest things about his job during the pandemic has been the silence.
âWhen you fly over London for example, it’s one of the busiest airspaces in the world,â he told DW. “And now you don’t hear or see any other aircraft in the sky, which would usually be completely blocked with other airlines talking and everything going on. All of a sudden it’s dead silence. on the radio. It’s strange. “
Not that he has many opportunities to grasp the strangeness. Since March 2020, he has only made an average of two round trips per month. His salaries have been cut and he has seen less experienced colleagues, and those in cabin crew positions, fall into financial difficulties. And he calls himself “lucky”.
His pandemic flight experience has ranged from flying an entire plane with a single passenger on board – “which is just weird; you kind of think, ‘What’s the point? “” – on the fly with vaccines and other essential equipment.
âWith that, there was a feeling that you were contributing,â he says. âA big problem when you’re not working is that you feel a little helpless: ‘What am I doing? Can I help someone? âSo that feeling that you’re helping the country a bitâ¦ and even talking to the passengers that we flew, they were mostly on essential trips, meaningful trips. The mere fact that we were able to do that was gratifying. “
Many scheduled flights over the past year have been virtually empty
Marc spoke to DW on the condition that his airline was not mentioned because “job security isn’t that great these days.” Like many in the industry, he is worried about what the past year will mean for his profession in the future.
State aid injected into national carriers
Whether it’s flying vaccines or medical equipment around the world or helping passengers make essential trips during the pandemic, the vital role of aviation can hardly be discussed.
Government support for the aviation sector is a bone of contention at present, however, from multiple perspectives.
The COVID-19 pandemic has caused unprecedented upheaval in the industry and airlines have lost staggering revenues (see graph). The crisis led to a dramatic turning point after years of privatization, with governments injecting more and more state aid into national carriers.
The trend has been particularly strong in Europe. Italy nationalized Alitalia at the start of the crisis, while last month the French government increased its stake in Air France-KLM to 30%. In Germany, the government spent 9 billion euros ($ 10.9 billion) for a 20% stake in Lufthansa, and the Swedish and Portuguese governments also took stakes in SAS and TAP Air Portugal, respectively.
It is not only the national carriers that have had to exploit new resources. Even Ryanair, the main critic of European bailouts, has agreed to special pandemic funding in the form of a $ 730 million loan from the UK government.
Yet while dozens of airlines across Europe have taken advantage of liquidity through a range of government offers, there is a clear dividing line.
According to European Airlines Rescue Tracker Managed by Greenpeace and the environmental groups Transport & Environment and Carbon Market Watch, European governments have already provided financial assistance of around 30 billion euros.
Of this amount, almost half relates to just two airlines: Lufthansa and Air France-KLM, while the other national carriers combined account for the vast majority of the remaining dispersed funds.
Ryanair’s legal fight
The European Commission has given the funding the green light but has attached conditions, such as forcing carriers to forgo valuable airport slots.
But Ryanair CEO Michael O’Leary is furious and has generally been brutal in what he sees as unfair state aid. He said airlines like Air France would never repay the billions given to them by governments and that the deals are unfair to airlines like his.
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âWe, easyJet, IAG and the others have to compete with these state aid and crack junkies,â he said.
Ryanair has launched a legal battle against state aid before various European courts. The common thread of the argument is that the type of support received by Lufthansa and Air France-KLM is discriminatory. It has lost every case heard so far, but the airline remains confident about its future chances.
The issue of emissions
What the rescue situation means for the future of aviation in Europe is a matter of serious debate. Some analysts believe that ultimately airlines that survive the pandemic without state aid will become more efficient and competitive in the long run.
Others are of the opposite opinion. “For many airlines, the lack of government support could ultimately spell disaster, especially for large carriers,” Shukor Yusof, founder of aviation consulting firm Endau Analytics, told Bloomberg. Ryanair itself echoed similar sentiments.
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There is another side to the whole question which has to do with the environment and the need for EU governments to reduce carbon emissions, with aviation clearly being a major contributor. Greenpeace launched its tracker to highlight the extent to which governments have bailed out airlines without strict environmental conditions.
“Throwing taxpayers’ money into this highly polluting industry without any environmental conditions makes no sense,” Lorelei Limousin, Greenpeace transport policy adviser, told DW. “Getting back to normal is really not an option.”
She said Greenpeace was not opposed to public support for airlines, but that billions of public funds should be spent supporting workers and the fight to cut emissions, rather than just putting volumes back in the air. pre-pandemic aircraft.
Airlines say the huge daily consumption of cash caused by the presence of planes on the ground makes such an approach impossible in the event of a pandemic.
This highlights the many valid but competing claims at the center of the debate over the future of aviation after the pandemic, whether it is airlines struggling to thrive or just surviving, environmentalists seeking to reduce emissions or pilots and cabin crew looking to get back to work. in the clouds again.