“The air transport industry is enormously resilient, and we will be able to adapt and overcome these challenges, provided that politicians and institutions understand that aviation is a key tool for working towards economic recovery and maintaining the cohesion of Europe, as well as being necessary for social welfare.”
Interview with Montserrat Barriga, General Manager of ERA (European Regions Airline association).
We are currently experiencing a global crisis due to the COVID-19 pandemic. This is having a huge socio-economic impact on all levels, but the impact is particularly significant for the air transport industry. What is the current situation in an industry that currently accounts for more than 12 million jobs in Europe?
The situation is very complicated. The industry is suffering massively because we are operating at levels that are 90% lower than this time last year. The only flights currently operating are cargo flights, a few repatriations, and little else. Many airlines have completely halted their operations. The return to normality will also be very slow; we don’t expect to spring back to the flight and passenger levels recorded in 2019. This aviation shut-down will obviously have a knock-on effect on other tourism businesses, airports, aviation services, etc. Aviation is a driver of development and job creation.
The European Union’s management of the coronavirus crisis is being criticised for a lack of solidarity and coordination. Is this also applicable to the aviation industry? What measures are being taken at the European level while the pandemic remains active?
Absolutely. Various different general measures have been approved, as well as specific measures for the industry, such as the deferral of tax payments and air navigation charges, waiving or deferring aircraft parking fees, etc. But these measures have been implemented by member states of the European Union in an inconsistent and uncoordinated manner. We believe that it would be much better if the measures were applied across the board, as this would prevent the rise of comparative and competitive inequalities between the various airlines, which necessarily operate internationally in Europe.
In a situation as exceptional as this, the work carried out by the various entities and associations in the industry, such as ERA, is essential. What actions have been implemented since the crisis broke out?
These associations are now playing a key role in ensuring that airlines receive the support they need from their governments and from the European Union. We are working against the clock to ensure that this support materialises, as the situation is developing very quickly.
ERA has over 200 partners, including airlines, airports and OEMs, among other companies and industry suppliers. They have recently addressed a letter to the European Commission, along with other associations, calling for urgent and short-term measures to ensure the viability of a critically affected industry. What is their proposal?
Exceptional situations require exceptional measures, and one of the main things we are working on at the moment is to get the European Commission and the European Parliament to allow companies to offer vouchers instead of cash to passengers requesting changes and refunds. Airlines have allocated their cash surpluses to paying the minimum resources needed to maintain their operating licence (employees, aircraft rentals and maintenance), in order to be able to return to operation and make other necessary payments. Huge sacrifices have to be made at the moment and we all need to understand this and be patient until such time as we can fly again, and this includes consumers.
Are regional airlines the ones suffering the most during this crisis?
I wouldn’t say that. The companies that are suffering the most are those that had the lowest cash reserves, regardless of the business model or size of the company. But I do believe that by the end of the crisis many regional airlines will be so severely affected that some will have to stop operating permanently. I hope that this will be the case for only a few companies that already had other structural problems, rather than the general rule, as this would be a serious loss in terms of connectivity in Europe and in terms of the variety of options available to the end consumer, which would in turn have direct consequences on increasing prices and decreasing the range of destinations and connections.
What are going to be the main challenges for the air transport industry once this crisis is over?
Returning to 2019 levels will take time. Like any industry, the air transport business involves high volumes and economies of scale, with high fixed costs and dependence on assets. If there is an excess of aircraft, it will be a challenge to restructure supply and adjust it to demand. Passengers’ preferences and needs will also change; there will probably be psychological constraints, as well as economical ones. We have enormous challenges ahead of us. But the air transport industry is enormously resilient, and we will be able to adapt and overcome these challenges, provided that politicians and institutions understand that aviation is a key tool for working towards economic recovery and maintaining the cohesion of Europe, as well as being necessary for social welfare.