The British government has said that airlines and airports will not receive an industry-wide bailout despite early hints at financial support.
UK Chancellor Rishi Sunak, who heads the country’s Treasury, penned an open letter to airlines and airports released on Tuesday (local time).
Chancellor Sunak reiterated a broader announcement made on Friday, in which the government declared it would pay the bulk of staff wages and defer some tax obligations and rates.
However, he specifically stated that loans would only be extended to individual airlines as a “last resort” after negotiations.
“Taxpayer support would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors,” Chancellor Sunak said.
He also said the government would make considerations based on “equitable and fair treatment of businesses across the [aviation] sector”.
Some analysts are suggesting this could scupper any negotiations or bailouts for specific airlines.
It is understood that the government’s attitude towards aviation bailouts has been hardened by the decision of some airlines to proceed with planned dividend payments. European LCC EasyJet, for example, plans to carry through on a payout of nearly $200 million, though executives cited legal obligations for doing so.
Chancellor Sunak’s comments have irked some in the UK aviation sector, which is operating repatriation services and cargo flights – including essential medical equipment. Many airports around the country are receiving little to no regular passenger traffic, and have indicated that some are likely to close.
Karen Dee, chief executive of the Airport Operators Association, said “After [the government] publicly announced a support package for airports and airlines, we’re surprised by where we find ourselves today.”
“While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days,” she added.
Dee also noted that many airlines were providing “lifeline services” to remote communities across the UK. This comes after regional airlines such as Scotland’s Loganair stepped in to take over ex-Flybe routes, after the latter’s collapse.
International Air Transport Association (IATA) has publicly called for urgent government assistance to the industry, warning that airlines stand to lose revenues of at least US$252 billion in 2020. This number is double the organisation’s “worst-case” forecast two weeks ago.
It is unclear how the UK decision may influence other governments around the world. The Trump administration is reportedly considering financial aid to the US aerospace industry, although no firm commitments have yet been made.
