Airlines suffer blow as England bans non-work overseas travel
Airlines were already reeling from the Covid-19 pandemic. They have eliminated tens of thousands of jobs, retired older fuel-guzzling aircraft and turned to capital markets and asset sales to survive a slump in travel.Updated: Nov 01, 2020, 04:55 IST
Prime Minister Boris Johnson’s government prohibited overseas leisure travel from England as part of a partial lockdown of the country to curb a resurgence of the coronavirus, throwing airlines into a fresh crisis.
The new rules will apply from Thursday through Dec. 2 and come as the industry struggles to survive a collapse in demand. Airlines hadn’t been informed about the restrictions before Johnson’s announcement Saturday evening, according to people with knowledge of the matter who declined to be identified as they weren’t authorized to speak publicly on the issue.
Airlines were already reeling from the Covid-19 pandemic. They have eliminated tens of thousands of jobs, retired older fuel-guzzling aircraft and turned to capital markets and asset sales to survive a slump in travel. In response to the resurgence in Covid-19 infections during the slower winter season, many have further slashed capacity to lower expenses.
EasyJet Plc, Europe’s second-biggest discount carrier, said in a statement it will operate its planned schedule until Thursday, and “it’s likely that much of the UK touching schedule will be canceled during lockdown with our planned flying set to resume in early December.” The carrier reiterated its call for government support for the aviation industry. British Airways said it’s assessing the new information and will keep its customers updated on changes to travel plans.
“Overnight stays and holidays away from primary residences will not be allowed -- including holidays in the UK and abroad,” according to restrictions announced late Saturday. All but essential shops will close, as will restaurants and bars, though schools and universities will remain open.
British Airways’ owner, IAG SA, said this month it would operate only 30% of its 2019 capacity in the current quarter. EasyJet has raised almost $400 million through a sale and leaseback transaction for some Airbus A320 aircraft.
“Christmas is going to be different this year, very different, but it is my sincere hope and belief that by taking tough action now, we can allow families across the country to be together,” Johnson said at Saturday’s press conference.
Even before the latest lockdown measures in countries such as France and Germany, the International Air Transport Association had predicted that the global airlines industry was on track to burn through $77 billion in cash in the second half.
Under the package announced by Johnson, state payments will be made to furloughed workers of as much as 80% of their wages through the new lockdown period. This could offer some relief to airlines -- along with other businesses -- as employers will only have to cover some tax payments for furloughed workers, a more generous system than at present where firms have to pay 20% of their wages.