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25 Apr, 2020 14:09

Airlines are in freefall amid Covid-19 pandemic, but why should taxpayers foot the bill?

Airlines are in freefall amid Covid-19 pandemic, but why should taxpayers foot the bill?

Airlines are turning to governments for rescue money – but bailing out the massive capitalist ventures makes about as much sense as leaving the middle row empty to avoid the virus.

With the world in a tailspin from Covid-19, airlines are in for a bumpy ride – and some of them are inevitably going to crash and burn. Everything may be up in the air but one thing is for certain: flying will never be the same again.

Air travel will be a much different beast when this lockdown nightmare is over. Some airlines and EU states now want to introduce in-flight social distancing with the middle seats left vacant, as part of a set of new rules to be announced next month. There’s also talk about airlines cancelling or reducing their in-flight food and beverages service to reduce interaction.

There will no doubt be some other regulations, such as compulsory facemasks, tedious longer queues when boarding, and temperature taking – which is almost pointless because some Covid-19 carriers will be asymptomatic.

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But the middle seat rule is an “idiotic” proposal, as Ryanair chief executive Michael O’Leary quite rightly pointed out the other day. 

It doesn’t make any sense when we’re all supposed to keep two meters apart, but the distance between seats is only 50cm wide on an average Ryanair plane. Sure, some scientists claim you can catch the virus once you’ve spent 15 minutes in its presence – which, if actually true, would mean it wouldn’t matter if you were sitting beside someone or three rows back.

Its only true effect here is a psychological one, to artificially restore confidence to get bums back on seats. I’m not a fan of the unpopular Irishman – who comes across like the Grinch who stole Christmas at the best of times – but O’Leary made a very valid point when he told the Financial Times: “Either the government pays for the middle seat or we won’t fly.” 

The last time I checked, Ryanair was in the business of making money and not burning it, which is exactly what would happen if they’re forced to fly at only 66 percent capacity. Airlines need this like a hole in the head, especially since they’re already grappling with the daunting prospects of less routes and less frequency, which will hike up prices as well. 

Some financial experts estimate ticket prices could increase by 50 percent – but I wouldn’t be surprised if they end up being even higher. One thing is certain: the days of cheap flash ticket sales are well and truly over for the foreseeable future.

There would be absolutely no appetite to bailout Ryanair if the airline that people love to hate found itself in troubled waters. Yet there’s a strong desire amongst some British commentators to rescue Virgin Atlantic, which can only be put down to blind patriotism for what would’ve been perceived as a Rule Britannia success story – up until now.

One of the first airlines to slump into administration this week was Virgin Australia and it looks like Virgin Atlantic could be next in line to wave goodbye. 

Some airlines have already been bailed out in the US and EU, which is the most foolish move since the banks were rescued in the noughties. These capitalists’ enterprises should live and die by their own sword, which is why I’ve absolutely no sympathy for Richard Branson who sounds out-of-touch to me.

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Considering he’s a tax exile, Branson insulted the British people when he went cap in hand – or rather with deeds-to-island in hand – to ask the UK government to bail out “his” airline (Delta owns 49 percent) to the tune of £565mn. The billionaire had some brass neck offering up Necker Island as the collateral as it’s reportedly “only” worth £80mn. But there’s definitely a nice little profit there, considering he purchased it for a low six figures in 1979.

Virgin Atlantic doesn’t appear to have very much in terms of assets, as far as I’m aware, which would make it a risky gamble for the British government if it went belly-up. Branson says his main goal is to save jobs, but in such turbulent times, Boris Johnson would get more of a return on the money by investing it elsewhere to create jobs in more sustainable industries. Surely anything is bound to be less risky than the airline business at the moment.

If Branson is genuinely concerned about saving jobs, as he claims, then his best – and certainly more honourable option – is to offer to sell his interest in Virgin Atlantic to the British government. At this point, it would make more sense to nationalise it.

It speaks volumes that Delta – despite receiving $5.4 billion from the Trump administration already and seeking an additional $4.6 billion loan from US taxpayers – is refusing to invest another dime in Branson’s baby. Talk about throwing the baby out with the bathwater!

The money Branson needs is a drop in the ocean compared to the $10 billion Delta is looking to get its grubby hands on, which makes you wonder if the American airline is either confident Boris Johnson will offer Branson a parachute, or has perhaps already accepted Virgin Atlantic will end up dead in the water sooner or later.

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As we face what’s going to be the worst recession since the Great Depression, Transatlantic travel is going to be increasingly more of a luxury than ever before, and business trips will be curtailed, probably more frequently replaced with Zoom, which could eventually kill off Virgin Atlantic in the long run anyway – just like how video killed the radio star.

It’s going to be a hard landing for those airlines lucky enough to survive this crisis, but there’s little or no benefit in any government bailing out any of those that crash and burn now because the market will have significantly shrunk after the pandemic. 

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.