The impact of the coronavirus pandemic on the aviation sector Contents

Conclusions and recommendations

Impact of the coronavirus pandemic on the aviation sector

1.The aviation sector is of huge strategic and economic importance to the UK. The drastic reduction in air travel caused by the coronavirus pandemic has been devastating for the industry. Finding a proportionate way to steadily resume the number of flights while minimising the spread of coronavirus must be a priority for the UK Government. (Paragraph 15)

Quarantine and common health standards

2.We are concerned about the Government’s decision to introduce a blanket 14-day quarantine period for travellers to the UK from other countries. This will further damage both the recovery of the aviation sector and the wider economy. We are not persuaded that a blanket quarantine policy is the right policy option at this time compared to the alternatives. We support a more targeted and nuanced border control policy that would allow people travelling from countries where the infection rate of Covid-19 is relatively low to enter the UK on a less restrictive basis. (Paragraph 27)

3.In responding to this Report, the Government should clearly explain the reasons for its current quarantine policy and the evidence base it used to make its decision. (Paragraph 28)

4.The Government will be reassessing the quarantine policy in late June and it is right that preventing a second wave of the infection should be the utmost priority in determining next steps. Should the conditions allow in late June, we strongly urge the Government to introduce a more flexible and risk-based approach to border control and people entering the UK. (Paragraph 29)

5.In order to allow the UK aviation industry to plan ahead, the Government should urgently update Parliament with detail about the key milestones and conditions that will need to be met for the current quarantine policy to be revised and ultimately ended. (Paragraph 30)

6.Aviation is a global industry and there is a need for internationally agreed health standards to minimise the risk to both passengers and workers from Covid-19. The UK has in the past led the way in the creation of global aviation standards and should do likewise for common health standards in light of the pandemic. In responding to this Report, the Government should set out what action it has taken at the international level to drive forward the development and implementation of global health standards for the aviation sector. (Paragraph 34)

Government support and intervention

7.Given the gravity of the crisis in the aviation sector, we recommend that the UK Government implements support measures aimed specifically at the aviation sector in order to stimulate demand and protect businesses. In particular, we recommend that the UK Government and the devolved administrations (where they have not already done so) introduce a 12-month business rates relief for airlines and airports and a six-month temporary suspension of Air Passenger Duty payments. (Paragraph 47)

8.Regional airports are vital to connect distant parts of the United Kingdom where no effective rail routes exist: Northern Ireland to Great Britain, and the UK’s nations and regions directly to other countries. The collapse of Flybe in March has unfortunately severely contracted regional air options across the UK. The sector-specific support we have recommended in respect of taxes on the aviation industry could help insulate regional airports from cost pressures. (Paragraph 55)

9.We recommend the Department for Transport resume as a matter of urgency its review of regional connectivity with a view to publication by the end of 2020.
(Paragraph 56)

Restructuring, redundancies and terms and conditions

10.The loss of some jobs in the aviation sector may sadly be inevitable. But such fundamental decisions about people’s livelihoods should not be made prematurely and until there is clearer information about the industry’s recovery. We urge UK-based aviation employers not to proceed hastily with largescale redundancies or restructuring to terms or conditions of employees until the Job Retention Scheme ends in October 2020 and they have had the opportunity to consider the Government’s plans to help the sector restart and recover. (Paragraph 64)

11.Some redundancies at British Airways, as with other airlines, may be sadly inevitable in the current crisis. Having questioned the Chief Executive of British Airways’ parent company and trade unions and received hundreds of submissions from British Airways employees, our view is that British Airways’ current consultation on staffing changes is a calculated attempt to take advantage of the pandemic to cut jobs and weaken the terms and conditions of its remaining employees. The behaviour of British Airways and its parent company towards its employees is a national disgrace. It falls well below the standards we would expect from any employer, especially in light of the scale of taxpayer subsidy, at this time of national crisis. (Paragraph 80)

12.We urge British Airways to extend its consultation period to allow meaningful consultation to take place as per its legal requirements, and without pre-conditions, so that all parties can consider the proposed staffing changes in the context of the Government’s plans to help the aviation sector restart and recover. (Paragraph 81)

13.The Government’s Coronavirus Job Retention Scheme was designed to help businesses affected by the pandemic to retain jobs and protect the economy. Some companies, such as British Airways, have proceeded with plans for large-scale redundancies while taking advantage of the scheme. This is regrettable. We recommend that the Government revise the rules of the Coronavirus Job Retention Scheme to prevent, or strongly penalise, companies for making large-scale redundancies, while in receipt of funds from the taxpayer. (Paragraph 82)

14.There have been calls from parliamentarians for the Government to strip British Airways from some of its slots, especially from Heathrow Airport where it is the dominant airline. Given the global nature of slot allocation rules, and international legislative restrictions, there are clear limits on what the UK Government can do. However, there has been considerable structural and market change within the aviation industry as a result of the pandemic, including the consolidation of airlines at specific airports. These changes may go on for years and could have serious impacts on consumer choice. We recommend that the Department for Transport and the Civil Aviation Authority explore every avenue available to ensure that recent changes and their impact on the availability and distribution of airport slots do not unfairly impact passengers. This should include referring the whole aviation industry to the Competition and Markets Authority for a market study and possible investigation. (Paragraph 83)

Passenger refunds

15.Many airlines and travel operators have failed to refund customers for package holidays and flights in a timely manner, in accordance with their legal obligations. This is an understandable source of frustration for many customers who have found the process for obtaining monetary refunds unnecessarily difficult. People under stress because of the pandemic have faced additional stress because of companies who have not refunded their money properly and promptly. (Paragraph 91)

16.The airline and travel industries are faced with an unprecedented crisis in which they have been asked to refund billions of pounds worth of fares in a short period while also covering their extensive costs of operation. We recommend that before the Government brings forward its planned Airline Insolvency Bill, it consults on whether protections should be introduced for airline passengers in the event of pandemic or other extraordinary circumstances. Any changes should be incorporated into the Bill ideally before its introduction to Parliament or, failing that, during its parliamentary passage. (Paragraph 92)

17.Airlines and travel operators have issued vouchers and credit notes as substitutes for cash refunds. Given that the viability of many airlines and package travel operators is sadly at risk due to the pandemic, the Government should provide reassurance to passengers by setting out clearly the circumstances under which a Refund Credit Note or a voucher issued by an airline is protected by the ATOL scheme. (Paragraph 96)

18.The coronavirus pandemic has exposed weaknesses in the EU and UK regulations covering refunds for flights and package holidays. We have some sympathy with the view that the legal time limits for refunds should have been extended in the current circumstances, as occurred in some EU countries. In responding to this Report, the Department should clarify why an extension to the legal deadlines for issuing refunds was not implemented in the UK. (Paragraph 101)

19.We note the Civil Aviation Authority’s concerns that the exercise of its current powers in relation to refunds can be difficult and take too long. They are also unable to impose financial penalties on operators who do not meet their obligations, unlike other regulators in the transport sector. We welcome the CAA’s review into how airlines are handling refunds during the coronavirus pandemic and look forward to its publication. We recommend that the Department and CAA conclude speedily a review of the CAA’s powers, to ensure that it can enforce the rights of passengers in an effective and timely way in future. (Paragraph 102)

A strategy for the recovery of the aviation sector

20.The Department has set up an Aviation Restart, Recovery, and Engagement Unit and the Minister told us she is devising a strategy to help the sector recover. While these moves are necessary and welcome, we are concerned at the lack of detail and pace of action given the precarious situation facing many airlines and the wider implications for the economy. In our view, the Government’s strategy for the recovery of the aviation sector should be more developed given we are already some four months into the crisis. (Paragraph 108)

21.We recommend that the Department for Transport, working with other Government departments, the devolved administrations and those within the industry, publishes a strategy for the restart and recovery of the aviation sector as soon as possible. This strategy must include details as to how the Department will rapidly restore passenger air travel and in particular set out plans to:

22.We request that the Department provide a progress report to this Committee by 1 July 2020 on its strategy for the restart and recovery of the aviation sector. (Paragraph 110)

23.We recommend that, until the end of 2020, the Department commits to making a monthly written statement to Parliament, to update Members of both Houses on the work and key outcomes of the Aviation Restart, Recovery and Engagement Unit. (Paragraph 111)

Published: 13 June 2020