Aviation Intelligence Reporter July 2020
A Study in Addiction
A Study in Market Distortion
A Study in Disagreement
A Study in Greenwash
A Study in Unintended Consequences in Aircraft Finance
A Study in Disruption
A Study in Rejection (And Piracy)
A Study in Reasonableness
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A Study in Addiction
To date, airlines around the world have been on the receiving end of approximately US$250 billion in bailouts. Yes, a cool quarter of a trillion. It is a staggering sum of money. Some is in the form of cash, some is wage subsidies, tax, fee andcharges waivers and some is loans. The counter is yet to stop ticking over. There is no sign the generosity is abating. But, note, this does not include general national economic stimulus packages. Nor does it include states allowing airlines to issue vouchers rather than refunds, thus converting ticket purchases into interest free loans.
This bailout money was paid by your taxes. It is your money, paid to the airlines of the world. But do not expect a word of thanks for that money; so selflessly given by you, so gracelessly received by the airlines.
A Study in Market Distortion
‘Now is the time for all good men to come to the aid of their country’ was a text set for typing practice, when typewriters had ribbons and rang a bell just before the end of a line. It neatly filled a single line of standard paper, if done accurately. Typewriters were superseded by the arrival of computers, but not before giving us the QWERTY keyboard, with the keys used most at the edge, requiring the typist to use their weaker fingers most often. That was an attempt to slow down the swing of the letters up to the ribbon, to avoid jams as the letters came together. The QWERTY keyboard is a useful analogy for aviation. There are many things that we still use that were sensible once, but have been superseded. But, on we go, typing away, using the old system, because, well, tradition! Three mile separation is one example; the freedoms of the air another.
A Study in Disagreement
In an ideal world, in times of crisis leaders come together, put aside their differences and work cooperatively to help us overcome the emergency we face. Instead, as the CEO of the World Travel and Tourism Council, Gloria Guevara recently noted, there has been a clear lack of leadership in the wider travel industry during the coronavirus pandemic. Rather than creating a cabinet of equals, of all the talents, or merely accepting a need to pull together and to put off for another day the quotidian squabbles, the aviation industry seems to have doubled down. Every bit of the industry seems to have taken the chance to push their agenda and devil take the hindmost.
A Study in Greenwash
You know things are bad, really bad, existentially bad, when the numerous, overlapping and usually bickering aviation trade associations in Brussels agree on something. So what could possibly have forced them to come out with a joint letter committing them all, each and every one of the alphabet soup of initials, to support the greening of aviation. They are right behind you, policy makers. Unless, of course, you think that to fund their suggestions – sustainable aviation fuel, a cash for clunkers scheme, public funding of research and the development of sustainable airports – the aviation industry should put its hands into its own pockets. Suddenly, the signatories cry poor.
The elephant in the room here is taxation. Might it be a new expert study that puts the lie to the role of ICAO and the Chicago Convention in fuel taxation that prompted this eruption of cooperation?
A Study in Unintended Consequences in Aircraft Finance
Just like market distortions, unintended consequences can come in many flavours. The UK government, in an attempt to support its industrial sector, reeling from the impact of the pandemic, has enacted legislation that will distort the market for aviation finance. This matters because about half of the world’s aircraft financing is subject to UK law. Litigation generally, including finance dispute resolution, is a significant UK export. But just as the EU’s allowing of class actions has already seen airlines change their conditions of carriage to counter it, this attempt to help failing firms will have an equal but opposite reaction, in the form of increased leasing costs.
A Study in Disruption
In a universe far, far away from the known aviation galaxy there is a small working group called the ‘Aerial Connectivity Joint Activity’ set up by the Global UTM Association and the GSMA, the global trade association of mobile network operators. Its work is in aviation – but not as we know it, Jim. What the ACJA hopes to achieve is to translate standards for operating mobile phone networks into standards which can be used for aviation. That will open up a new world – allowing mobile phone network operators to develop new businesses in the command and control of autonomous vehicles, providing the entire communications, navigation and surveillance and air traffic management network for low-level operations and downloading, in real time, mega tonnes of data in video-streaming and telemetry formats from the air to the ground. It will accelerate the introduction of half-understood but exciting new concepts into the aviation sphere, like edge-computing, Internet of Things networks and, even more exciting, 6G.
A Study in Rejection (And Piracy)
It is a difficult time to be a pirate. Like airlines, they pass for having outspoken leaders, colourful language and threats aplenty. But with no trade group or respectable PowerPoint skills, there is no bailout for them. They must pursue treasure the old fashioned way. But making landfall now is a nightmare of false positives. For pirates, X no longer marks the spot. From shops to buses, the humble cross has repurposed from denoting bounty to instructing social distancing.
A Study in Reasonableness
When forced into crisis, the one thing we can control is our response. Aviation is no exception. In April 2020, US carriers saw a 70.3% decrease in the number of domestic flights compared to April 2019, yet saw a 1,500% increase in complaints. Of the 20,000 or so complaints filed in April, 90% related to refunds. In response, Airlines for America announced that member carriers, including American, Delta, JetBlue, Southwest and United, will voluntarily ‘pledge to refund tickets for any passenger who is found to have an elevated temperature.’ A4A has also stated that ‘refunds are issued to passengers when flights are cancelled by the airline’, a distinction which has left thousands of customers high and dry given that 41% of flights were cancelled and passengers rebooked onto flights not of their choosing, within a week of departure last month. You might think that every passenger is precious at the moment, but no. Airlines are scheduling as many flights as possible, so as to look busy. Passengers in the middle of a global pandemic need protection, not verbal and legal gymnastics.