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#Weareinthistogether: Why the Entire Aviation Supply Chain is Fighting for Its Survival

By  Brussels,

COVID-19 has brought aviation and the wider travel and tourism industry to a grinding halt. Widespread travel restrictions in Europe and around the world have caused demand to plummet — so much so that for the first time in airlines’ history, flight cancellations are outnumbering new bookings. In other words, the primary financing source for the aviation industry has dried up.

The result of this is that airlines have grounded their fleets and reduced operations to the bare minimum in a desperate attempt to survive. Like others, airlines have a significant amount of fixed costs and obligations to their passengers under European and national legislation — leading to a quicker depletion of cash reserves. With many A4E airlines shuttering their operations until further notice, it’s clear that the entire aviation supply chain is fighting for its survival and needs immediate support. This includes the 12 million jobs supported by aviation in Europe — workers at airlines, airports, air navigation service providers, catering suppliers, ground handlers, hotels, maintenance engineers, aerospace manufacturers, and many, many others.

There was some good news this week. EUROCONTROL member states took the positive decision to defer airlines’ February–May ATC charges, with payments beginning in November 2020. This represents one of the fastest ways to boost airlines’ short-term liquidity during the peak of the crisis. It also helps airlines maintain funding for minimum operations and cover fixed costs — effectively postponing the possibility of insolvency.

Today nobody really knows when the recovery period will begin or how things will develop. Airlines are hoping for the best — but preserving cash to prepare for the worst. Hence, in a realistic recovery scenario, deferring payment of ATC charges won’t be enough, as such a deferral only moves airlines’ current liquidity crisis to a later date. Other, more long-term support measures need to be discussed, for example a full-year waiver of ATC charges or additional EU/state funds to finance the entire aviation value chain.

Let’s also not forget about the lessons learned from previous crises, such as the financial crisis of 2010. We cannot merely “hibernate” the system and re-activate it in the future, as we would with our computers. Aircraft are still flying to transport essential supplies or for repatriation purposes. Consequently, it’s imperative to maintain skeleton operations at all areas linked to aviation, including at airlines, air navigation service providers (ANSPs), airports, freight operators, maintenance providers and even hotels. In addition, pre-COVID-19 agreed airspace efficiency projects must be continued. Nobody wants another 2018 (which saw the highest en-route ATC delays in the last decade).

In summary, keeping aviation going through the crisis will require a level of funding which airlines cannot provide for the foreseeable future. The entire industry therefore needs to work with the states and the European Commission to identify and make available much-needed relief funds — with the single goal of ensuring that airlines, and the wider industry, can survive this crisis and re-instate a functioning aviation market for our passengers as quickly as possible.