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UK airlines seek Covid-19 wage support beyond June

Reuters (London): Britain’s airlines want the government’s coronavirus wage support scheme to be extended beyond June, maintaining the assistance for longer with a slow recovery in air travel expected.

Airlines UK, the industry’s representative body, wrote to the finance minister requesting an extension of the scheme, which airlines including British Airways (ICAG.L) and easyJet (EZJ.L) have used to furlough workers. Under the Coronavirus Job Retention Scheme, the government pays 80% of the wages of staff who are temporarily laid off, up to 2,500 pounds a month.

Airlines, many of which have grounded the majority of their fleets, have used the scheme to avoid making staff redundant in the hope that when travel restrictions are eased and demand returns, they can restart operations. The scheme runs until the end of June, but the airlines want it to be extended “to avoid aviation facing a cliff-edge post-June, whilst services are scaled-up”, Airlines UK said in its letter. Global industry body IATA has predicted a slow recovery in air travel and warned that many airlines could go out of business, with European traffic currently down by 90%. UK-based airline Virgin Atlantic continues to talk to the British government about a bailout package to help it survive.

Asked about the extension of the job retention scheme for airlines, junior health minister Edward Argar told Sky News on Monday that he knew the finance minister Rishi Sunak was keeping the schemes under review.

“I know that the Chancellor is very, very aware of how important the airline industry is,” he said.

Air travel faces a further headache as the government said it was considering the possibility of requiring passengers to go into quarantine for two weeks once they arrive in the UK.

BBC News: Airlines urge chancellor to extend job support scheme

The BBC reports that airline industry bosses have urged Chancellor Rishi Sunak to extend his job retention scheme beyond June. Aviation industry body Airlines UK said airlines hit by coronavirus would face "a renewed cash crisis" if the scheme were withdrawn prematurely. The Treasury is currently paying most of the wages of nearly four million staff, working across the economy, who have been put on temporary leave.

Separately, an all-party group of MPs has called for a bailout of aviation. However, the group of 20 MPs said in a letter to Mr Sunak that any support package offered to airlines and travel companies should come with stringent environmental conditions. The letter said: "If public money is used to save them, they must be required by law to do more to tackle climate change.

"They must be obliged to follow in the footsteps of many in the industry that have implemented ambitious carbon offsetting schemes."

On Sunday, Virgin Atlantic said it was still in talks with the UK government about a coronavirus-related bailout. Many airlines have been struggling as revenues have dropped amid travel bans. In its own letter to the chancellor, Airlines UK said it expected that once coronavirus restrictions were eased, the return to normality for international aviation would be "gradual rather than sudden" and that carriers would increase capacity "incrementally".

Airlines UK said that it believed the job retention scheme would need to be extended beyond June. It said the government should consider "tapering" the scheme or reviewing it on a sector-by-sector basis. Otherwise, it said, aviation would be "facing a cliff-edge post-June, whilst services are scaled up". The job retention scheme was originally intended to cover 80% of furloughed workers' wages for March, April and May, but has since been extended until the end of June.

According to the UN's civil aviation body, ICAO, international air passenger traffic in the first three quarters of 2020 could drop by as many as 1.2 billion travellers, or by two-thirds. Many in the airline industry believe it could take up to three years to get back on track. However, last week Ryanair boss Michael O'Leary said he expected to see a much faster recovery, subject to an effective coronavirus vaccine.

Top Image - Courtesy of Heathrow Airport

Below: Many airline employees are currently laid off due to the restrictions and aircraft are parked, costing airlines huge amounts of money in lost earnings (Kevan James).

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