Post-covid clouds have no silver lining for airlines

June 15, 2020

 

With the air transport industry set to lose thousands of jobs, it has been suggested that all these newly-redundant workers re-train for employment elsewhere - but doing what? Covid-19 and the response to it by governments around the world has devastated every sphere of work. Having already asked the question earlier on KJM Today, writing for Scotland's Herald newspaper, Kristy Dorsey takes matters further.

 

One of British Airways' Airbus A320 family airliners (Kevan James)

 

You know things are bad when people start selling off the family silver and when it comes to corporate clans, nothing says “dynasty” like a line-up of expensive artwork throughout the halls of HQ. So, if hundreds of grounded planes, thousands of furloughed staff and threats of wide-scale redundancies weren’t enough to drive home the point, the news that British Airways is gearing up to auction off part of its multi-million-pound art collection further underlines the depth of the crisis faced by the UK’s national carrier. 

 

Among the 1,500 or so works amassed between 1995 and 2012 with the help of London-based curator Artwise are pieces by Damien Hirst, Peter Doig, Tracey Emin and Bridget Riley, to name a few. The airline has so far refused to comment on the sale and has not identified which pieces will go under the hammer. Reports suggest as few as 10 could go to auction, so even if BA’s most valuable seven-figure works were included in that, the amount raised would be a drop in the ocean compared to the cash-flow crunch faced by it and the wider aviation industry. A cynic could be forgiven for thinking that this story has been intentionally leaked as a public relations diversion to bolster BA as it fights a war on two fronts against both the UK Government and its own staff. Apparently the idea for selling artwork came from employees who were asked for suggestions on ways to save money, a task many no doubt embraced as a way of potentially saving their jobs.

 

easyJet re-launched flight this week but are still about to challenge the UK quarantine law

(Tyler McDowell)

 

In its offensive against the Government, BA is joined by easyJet and Ryanair, which together on Friday filed papers in the high court seeking an urgent judicial review of the 14-day quarantine laws that came into effect on Monday. Britain’s three biggest airlines argue the rules are flawed and will cost thousands of jobs in an industry that is already teetering on the brink. Civil aviation has faced and overcome several significant challenges so far in this young century, ranging from the shock of the 9/11 terrorist attacks in 2001 to the slide in demand following the 2008 financial crisis plus Iceland’s volcanic eruptions of 2010. But the grounding of fleets around the world since late March as the Covid-19 pandemic spread is on an entirely different scale.

 

Airports body ACI World has forecast that global passenger numbers will more than halve this year, with 4.6 billion fewer people passing through airports than in 2019, when numbers hit an all-time high of 9.1 billion. This will lead to record losses across the industry, which is why Britain’s biggest carriers are intent on bringing a quick end to UK quarantine laws that will stifle passenger demand and hamper a return to the skies.

 

Ryanair’s Michael O’Leary – never one to shy away from a fight – has described the rules as “nonsense”. In a further sign of just how frosty relations between industry leaders and UK ministers have become, O’Leary also branded this week’s Government advice against passengers taking on hand luggage as “rubbish”, and is instead encouraging travellers to do the exact opposite. Nor is Willie Walsh, chief executive of BA parent company IAG, likely to form a support bubble with UK Government representatives any time soon. He has attacked the quarantine rules as “irrational and disproportionate”, and has also been on the receiving end of political scolding for BA’s approach to job cuts.

 

Ryanair's CEO Michael O'Leary has described the quarantine regulation as 'Nonsense'.

(Tyler McDowell)

 

BA is planning to make 12,000 of its 42,000 staff redundant, and wants to change the employment conditions of those who keep their jobs. This has kicked off a row with trade unions and led to calls for BA to be stripped of its lucrative landing slots at Heathrow. Tory MP Huw Merriman, who chairs the Transport Select Committee, has accused the airline of using the pandemic as an excuse to slash jobs and employment terms. “British Airways is the only airline which is sacking its entire 42,000 workforce and replacing it with 30,000 jobs on inferior terms,” Merriman said earlier this month. “BA have tried this before but its workforce resisted. It’s ethically outrageous our national flag carrier is doing this at the time when the nation is at its weakest.”

 

Meanwhile, the Unite union which represents BA cabin crew stepped up pressure this past week when it approached the European Commission to register its opposition to IAG’s proposed acquisition of Air Europa of Spain. The union is questioning why IAG is seeking to “fire and rehire” BA workers while continuing to plough ahead with the £898 million purchase. Walsh said in May that IAG is evaluating whether to go ahead with the acquisition, which is currently being reviewed by competition authorities.

 

But regardless of how this three-way tussle between BA, its staff and the Government ends, the sad fact is that thousands of airline workers will be joining the ranks of the unemployed. A report from the New Economics Foundation (NEF) has warned that the grounding of air travel will prompt a jobs crisis on a scale of coal mining’s collapse in the 1980s, which left lasting scars across communities in Scotland and elsewhere.

 

The NEF is encouraging ministers to transform the Government’s furlough scheme into a retraining programme to help people move into new sectors. This is a sensible suggestion, as figures due to be released on Tuesday will show further significant deterioration on the record 69% surge in those claiming unemployment benefits during April.

 

The question now for airline staff and millions of other workers is: retrain as what? The hospitality and retail industries eventually soaked up a proportion of those displaced because of the 2008 financial crisis, but these sectors are now on their knees. From where will future economic growth and job creation flow? Now is not the time to end Government support, but rather to alter its focus to identify and assist sustainable industries of the future.

 

 © Kristy Dorsey / The Herald

 

 

Reduced demand has left the use of very large aircraft like the Airbus A380 open to question. Airlines are retiring the type from service along with other big airliners like the Boeing 747 and with them, the jobs of crews needed to fly and service them. Airlines worldwide will not be able to retain the levels of staff needed before the outbreak of Covid-19.

(Kevan James)

 

Coming Soon:

'So You Want To Start An Airline' by Andy Martin

All the questions and answers about how airlines work

 

 

Available now: Aviation books from KJM Today - details on the Home Page

 

 

   

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