IPA Pilots - Aviation – the forgotten industry?

Aviation – the forgotten industry?

The UK aviation industry has been decimated by Covid-19, and the effect the virus has had globally.  As at the time of writing, the government has still failed to provide specific, targeted help for this industry, with Grant Shapps et al giving assurances in the Commons on numerous occasions that we will hear something ‘very soon’.  That was in November 2020, some eight months after the virus reached the UK. 

Dipping in and out of press conferences, Commons statements, Downing Street briefings, and interviews on news outlets, common, repetitive themes have occurred for the purported ‘help’ for the aviation sector.  So, what has that ‘unprecedented support to the aviation industry’ been? 

Te Coronavirus Job Retention Scheme (Furlough Scheme).  This has undoubtedly saved many jobs where the only alternative would have been redundancy.  The Scheme has been extended multiple times, reflecting the need to support businesses and their employees.  However, when restrictions were eased, and those in hospitality and retail were able to return to work, pilots remained at home.  Not only losing out on salary, but also other elements, such as flight duty pay.  The scheme has helped the sector, along with many, if not all other industries, to retain staff, but in the case of aviation, it does not get our members flying again. 

Government loans.  Most companies were or are eligible for the loans available because of the pandemic.  For aviation, these loans are problematic twofold.  Firstly, the running costs of an airline or operator are significantly higher than many other industries, meaning that the value of government loans are unlikely to scratch the surface of an operator’s outgoings.  Additionally, the loans were targeted at SME’s, which could affect eligibility.  The second problem for the sector is that these are loans, not grants.  Therefore, any loan is going to have repayment terms.  In a sector where recovery is unlikely for years (and, if at all to pre Covid levels), companies cannot commit to loans if there is such uncertainty over the ability to repay them.  Businesses are able to apply for loans, such as the Coronavirus Large Business Interruption Loan Scheme until 31 March 2021.  How many UK operators are eligible or have applied for this, or the Coronavirus Business Interruption Loan Scheme to date is unknown.  It is unlikely that such information would be openly shared with staff in any event.

 

Tax deferrals.  In June 2020, the introduction of the domestic reverse charge for construction services was delayed from 1 October 2020 until 1 March 2021, due to the impact of Covid-19 on the construction sector.  In September 2020, the temporary reduced VAT rate for hospitality and tourism was extended to 31 March 2021.  Businesses deferring tax payments between March and June are also able to repay them in 11 interest free monthly instalments across the 2021/22 financial year.  Why mention construction?  Because it is a sector that has been allowed to continue during Covid-19, and it has received specific help. 

Early action on airport slots. It is impossible to argue that this was not targeted for the aviation sector.  The 80/20 suspension has been extended until March 2021.  Depending upon which carrier you fly for will likely influence whether you think this is the right decision, as it (arguably) prevents the opportunity for slots to be offered to carriers who might not otherwise have a presence at certain airports, but also means that airlines are not having to operate empty flights to preserve the slots.  Given the various predictions as to how long a recovery is likely to take, there is likely to be worldwide debate on the best approach moving forward in conjunction with the Worldwide Airport Slot Board. 

Whilst of some assistance to the industry, none of these measures get aeroplanes back in the sky and our members back doing the job they love. 

Sky presented a documentary on Sky Arts on 20th December 2020 titled Culture Interrupted.  Some people reading this may have seen it.  The documentary explores the impact of Covid-19 on the arts, with particular emphasis on music.  There are discussions with artists with established careers and those just starting out.  Somewhat analogous with pilots, whether senior Captains or First Officers in their first role.  Careers put on hold indefinitely due to a global pandemic.  The difference is that to some extent, the arts have been supported with a £1.57bn recovery fund.  Surprisingly, aviation gets a mention, with one composer and musician stating, "Looking at how the airline industry, for example, seating people right next to each other, which has been very confusing in terms of saying that's been OK, but it's not OK for people to be sitting next to each other in venues."  Is this not too simplistic a statement?  To our knowledge, there have not been documentaries on the impact of Covid-19 on the aviation sector.  Interviews with various interested parties yes, but nothing that truly explores the damage being done in terms of companies collapsing, job losses and the mental health and wellbeing of those affected.  The two most recent articles in the media on aviation have been that those working in the operation of the aeroplanes may be somewhat ‘rusty’ as and when flights operate again, and a further article just a couple of days ago on the number of fatalities in commercial air transport in 2020.  Neither of which present the industry in a positive light.  Aviation needs greater support from the public and the media. 

2021 offers a glimmer of hope in terms of vaccine rollout, with two vaccines now approved for use in the UK.  However, accurate testing at a reasonable cost is also likely to impact of passenger confidence.  Both these clinical measures will be important to our members.  Time will tell whether operators/employers will expect their flight crew to be vaccinated (bearing in mind the government’s list of priority groups), and whether the vaccine will give confidence to travellers and other countries that the transmission rate is significantly reduced as a result of such measures.  Whilst in the UK we can do all within our power to advance both vaccinations and testing, other jurisdictions need to consider us a ‘safe’ country before air transport can truly recover.  It will be an international effort that will take time. 

The report of the Global Travel Taskforce has now been published, and its findings are here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/940142/report-of-the-global-travel-taskforce.pdf

Whilst the proposals and recommendations are welcomed, the biggest concern for aviation is going to be timescale, and how business and their employees can remain protected until recovery of this vital sector starts in earnest.  Until then, there is a feeling that aviation remains the forgotten industry.

*Source of financial/tax information – Deloitte Covid-19 Related VAT and Sales Tax Measures Global Summary 1st December 2020*

The Independent Pilots (Financial Services)

The Independent Pilots (Financial Services) Ltd was set up for the IPA and are specialist Chartered Financial Planners dedicated to providing the very best tailored advice for our members.

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