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Covid-19: Airline Sector

Volume 804: debated on Monday 29 June 2020


Asked by

To ask Her Majesty’s Government what assessment they have made of the impact of COVID-19 on the airline sector; and what steps they are taking to support that sector.

My Lords, the Government recognise the challenging times facing the airline sector because of Covid-19. They have announced an unprecedented package of measures that the sector can draw upon, including a Bank of England scheme for firms to raise capital, time-to-pay flexibilities, and financial support for employees.

My Lords, given the parlous state of the airline industry and the fact that it is a major employer and driver of the economy and vital for delivering the project of global Britain, does my noble friend recognise that a further package of emergency measures, such as a 12-month waiver for air passenger duty and an extension of the furlough scheme for aviation, is vital to safeguard the sector’s future, to stimulate demand and to safeguard airline jobs?

My noble friend is quite right that it is important that we give all necessary support to the aviation sector. She mentioned two possible things that could be done. On air passenger duty, that is paid by passengers, of whom there are of course very few at the moment, but to the extent to which an airline might have had previous liabilities, they have been allowed to delay paying that under the Government’s time-to-pay arrangements. On furlough, that scheme is already in place until October.

My Lords, with the aviation industry not expecting demand to rise to pre-lockdown levels until 2023-24, and companies such as British Airways currently haemorrhaging nearly £30 million a day, does my noble friend agree that what the sector now needs above all is certainty? Does she accept that, while the proposed air bridges are welcome, each day’s delay in introducing them means significant and potentially crippling further losses to the industry, and that these air bridges need to be fully functional as a matter of urgency?

My noble friend will be aware that the Government are considering international travel corridors not just for air travel but all forms of international travel. We are looking at exemptions in respect of particular countries and particular routes. Many options are under consideration and there will be an announcement in due course.

My Lords, I declare my interest as co-chair of Peers for the Planet. The noble Baroness, Lady Penn, recently assured the House that climate change plays a central role in government decision-making. In any further support for the aviation industry, will the Government make sure that green strings are attached, as other countries such as France, Holland and Austria have recently done? In particular, will there be effectively enforced conditionality in areas including reducing emissions per passenger mile and developing and promoting more sustainable aviation fuels?

I would not like to prejudge what conditions would be put on any bespoke funding for any particular airline that might be under consideration, but I reassure the noble Baroness that we are investing in greener fuels for the aviation sector. On 12 June, the Secretary of State set up the Jet Zero Council, which consists of the Government, aviation and environmental groups to look at how we are going to achieve net zero emission flight as soon as possible.

My Lords, I declare an interest as vice-president of BALPA and as a member of the GMB. Given that the Government have rightly set up an aviation restart and recovery group, would it not be sensible for Ministers to ask all UK airlines and the aerospace sector to agree a moratorium on all major redundancy and restructuring plans until a clear strategy emerges from that group? Otherwise, they will risk losing vital skills and experience which will be essential in the new situation. When can we expect a clear strategy to emerge from that group?

The noble Lord is quite right that there is a tension at the moment in that the aviation sector is suffering and jobs are being lost and we must look to the future as quickly as possible. Certainly, the aviation sector is going to have to shrink—one hopes, temporarily. As the noble Lord pointed out, the restart, recovery and engagement unit within the Department for Transport is working at great speed with the sector and many others including the unions to come up with a recovery plan.

Airports have been very badly hit, but, unlike airlines, they have to continue to operate and employ staff although there are very few flights. All airports pay millions in business rates. There is one simple thing that the Government could do today to assist airports in England: follow the lead of Northern Ireland and Scotland and cancel business rates for the next year at least. Will the Minister agree to that?

Airports have been able to take advantage of a number of interventions by the Government. For example, 2,600 workers are currently on furlough under the Coronavirus Job Retention Scheme. As for business rates, while airports as a whole are not included in the business rates holiday, individual airports can discuss their circumstances with their relevant local authority.

My Lords, the Government should not allow a UK airline to be on the breadline. The airline sector contributes £40 billion to the UK economy and employs more than 600,000 people. Bearing in mind that 13 of our 15 most popular destinations have a lower R rate than we do, will the Government commit to reviewing the 14-day quarantine rule?

As I was able to confirm in an earlier answer, the Government are working at pace in looking at possible exemptions for particular countries or routes, not just for the aviation sector but for any other international travel sector.

My Lords, I am sure that all noble Lords appreciate the importance of regional connectivity using regional airlines to link places such as Teesside to Heathrow, as included in Heathrow’s expansion plans. Despite the challenges presented by the Covid-19 crisis, does such connectivity remain a priority for the Government and how will they make sure that the regions still have connectivity into the capital?

My noble friend is absolutely right in that regional connectivity was, and remains, a priority for the Government. The restart, recovery and engagement unit within DfT is working with the aviation sector to look not only at international travel but at how we make sure our regions stay connected. I am sure that my noble friend is aware that we already have public service obligation routes between Londonderry and Dundee and London; previously, before the demise of Flybe, we had such a route from Newquay. We take regional air connectivity very seriously and will come forward with a review in due course.

My Lords, the airlines’ hated 14-day quarantine, introduced by regional government regulations, is due to be eased. Should the airlines and countries concerned be confident that the Government and devolved Administrations will amend their regulations to remain in step on a national basis? If a so-called handbrake change were applied either by a foreign country or by the United Kingdom Government to reintroduce quarantine, would it affect the whole of the United Kingdom?

I thank the noble and gallant Lord for that question. The Government have worked, and continue to work, closely with the devolved Administrations throughout the Covid-19 pandemic to ensure as coherent an approach as possible across the four nations. We will announce further details on the regulations, including a full list of the countries and territories from which arriving passengers will be exempted from self-isolation requirements, later this week.

In response to my noble friend Lord Tunnicliffe on 4 June, the Minister said that if a firm sought any bespoke financial support from the Government, it might be subject to conditions that included some of those which had been outlined by my noble friend, which were: protecting jobs, salaries and workers’ rights; taking steps to tackle climate change; maintaining their tax base in the UK; not paying dividends until doing so was liable; and fully complying with consumer law, particularly in relation to refunds. Can the Minister confirm that that remains the Government’s position, and say whether any discussions have taken place with airlines or air operators over bespoke financial support and what progress has been made on that support being subject to conditions?

I am not able to comment on any particular conversations we may or may not be having with individual companies. However, I can confirm that the Government stand ready to support individual companies seeking bespoke support if they have exhausted all other measures, either from the Government or through private sources—for example, their shareholders. It remains the case that such support might come with the sort of conditions that the noble Lord mentioned. However, I would not want to prejudge that and, as I have said, any ongoing discussions about support would be subject to all sorts of terms.

My Lords, I am afraid that the time allowed for this question has now elapsed. We move now to the fourth Oral Question.