On Wednesday 3 June, the Minister for Transport, Tourism and Sport, Shane Ross, announced a proposal to establish a Task Force for Aviation Recovery. The taskforce is to be charged with developing and advising on the framework for restarting the Irish aviation industry. It is planned that key stakeholders from the industry will be appointed to the taskforce within a week of the announcement, and they will be asked to report back to him within 4 weeks with a plan to relaunch the aviation industry in Ireland.
Over the last three months, the impact of Covid-19 on the aviation industry has been discussed at length at webinars hosted by the various industry representative bodies and advisory groups. The casualties of the industry have been well covered in mainstream media.
Earlier this week, IATA – the International Air Transport Association – predicted that the losses this year will be the biggest in aviation history at over $84 billion; with a further $16 billion in 2021. The biggest driver of the losses is a significant reduction in passenger demand. At the lowest point in April, global air travel was roughly 95% below 2019 levels.
Cargo is the silver lining in an otherwise dark cloud over the industry. While overall freight tonnes are expected to be lower this year than in the prior year, a severe shortage in capacity is expected to push rates up. Revenues in 2020 are expected to reach a near-record $110 billion; up 8% on 2019.
In real terms, the impact of Covid-19 is the failure of airlines and the loss of jobs. Many airlines have entered bankruptcy proceedings, including Columbian airline Avianca and Chilean headquartered LATAM. In addition, many airlines have sought Government bailouts with the most recent being the $5 billion bailout of Cathay Pacific by the Hong Kong government in the last 48 hours.
Closer to home, the key airlines serving Ireland, Ryanair and Aer Lingus, have publicly announced some of the measures that they are taking to tackle costs including pay cuts, proposed work practice reforms and redundancies. DAA and Shannon Group have been forced to “right-size” their businesses to match the number of passengers using their airports in the medium terms.
The Roadmap for Reopening Society and Business, published by the Irish Government on 1 May, does not set out any timeframe for the resumption of aviation, nor does it include any clear definition of the conditions that need to be achieved to allow such a resumption on an unrestricted basis. This absence has been the source of anxiety for the aviation industry. Acknowledging this, Minister Ross has announced that in addition to establishing the taskforce, his department is also progressing the development of an Aviation Recovery Plan through four inter-related strands of work:
1. They are looking to the experience of other countries in opening borders and monitoring the effectiveness of measures to control any resumption of Covid-19 growth. They will consider how a phased approach to reopening might be developed based on the criteria outlined by the European Commission as a basis for an aligned European approach.
2. In conjunction with the Department of Health, they will agree the new protocols that should be applied to promote health and virus control in the aviation journey. It is expected that a code of practice will be finalised and published in the coming weeks.
3. They will continue a close bilateral engagement with both State-owned and non-State owned parts of the industry that are critical to future connectivity with regard to capability and readiness to resume operations.
4. They will consider what support measures, if any, beyond the supports already adopted, may be necessary to facilitate the rapid return of a strong aviation industry that can in turn support the wider economy through the recovery phase. This will be subject to close consultation with the Department of Public Expenditure and Reform.
The announcement of the establishment of the taskforce, coupled with the publication of the steps being taken in developing an Aviation Recovery Plan, is welcomed news for the industry. As was acknowledged by the Minister in his speech; for an island economy built largely on international trade and foreign direct investment, aviation is the lifeline that connects Ireland to the global economy. Unlike our fellow EU Member States, we do not the advantage of international road and rail connections to support the international movement of people for the purposes of business, tourism or social intentions. Therefore, our ability to recover economically from this crisis depends on the recovery of the aviation sector.