27 Apr 2020
Posted in Travel & Tourism
UK Government must extend help for airlines but attaching conditions will make it more palatable for taxpayers
Following the announcement last night that Airlines UK is urging the UK Government to extend its job retention scheme beyond June;
Nick Wyatt, Head of R&A and Travel & Tourism at GlobalData, a leading data and analytics company, offers his view on the situation:
“An extension to the job retention scheme is necessary but further support for airlines must come with conditions attached to make it more palatable to the UK taxpayer.
“The scheme has been a great help to airlines as they look to stem the bleeding of cash. It has allowed them to furlough workers with a view to re-employing them when demand allows. Airlines are burning through cash and Airlines UK is right to warn of ‘a renewed cash crisis’ if the scheme is not extended.
“To make this more palatable to taxpayers, conditions around share buybacks, executive pay and environmental commitments should be worked into the conditions of funding. The US serves as an example here, having barred companies that access aid from engaging in share buybacks for the term of the loan plus one year.
“The industry needs help to ensure it remains viable and competitive post-COVID-19. However, many taxpayers are not big advocates of public funds being used to help large-scale corporations that generate billions of dollars of profit each year. The bailout of the banking sector has left scars.
“This view is a little narrow but the electorate must not be ignored. The UK Government must strike a balance between helping an industry in need and keeping taxpayers onside.”