The global changes to the aviation sector, caused by Covid-19, have been rapid and radical. It would have been impossible back in January to anticipate how many flights would be grounded, how air travel demand would sink, and how many airlines would be struggling to stay solvent. In a thoughtful piece by the AEF (Aviation Environment Federation), they consider how aviation policy needs to be re-thought, when the virus crisis is over. It is an opportunity to re-think society’s relationship to air travel, in a world that has been woken up to the realities of a global pandemic, and its consequences. Even when the sector hopes, post-virus, to get back to “business as usual” flying, the long-term danger of climate breakdown remains – and the threat worsens. The AEF says it is time to cease aviation exceptionalism, and the special treatment is gets on environmental policies and regulations. This needs to change. And there should not be measures to cut aviation tax, as demanded by the industry, that increase air travel demand. That is not justifiable. Covid-19 has demonstrated the desire, by millions, to look after and care about the welfare of others. Perhaps this virus wake up call could bring the dawning of a more responsible age. .
Coronavirus may prove to be the biggest shock ever seen to the aviation industry. Some airports could close, while airlines are cutting services by 80% or more as a result of travel restrictions and are talking about imminent bankruptcies. Virgin Atlantic, whose majority shareholder is billionaire Richard Branson’s Virgin Group, is understood both to have requested a government bailout of the airline and to have asked its staff to take 8 weeks of unpaid leave.
The Airlines Operators Association has called for a package of measures including suspension of business rates and regulatory costs, airlines want an APD holiday and air traffic control charges frozen, and Unite the Union has called for part nationalisation of the industry, and subsidies for certain routes.
The drop off in aviation activity has already meant a reduction in aviation pollution. Fewer planes mean less noise and a dramatic reduction in emissions. Flights departing the UK emit around 100,000 tonnes of CO2 per day, so a reduction in flights of 80% would reduce emissions by around 80,000 tonnes of CO2 for every day that measures are in place. Yet for those impacted by or particularly at risk from the virus, and for those, including airport and airline staff, facing an uncertain future and economic hardship, these are extraordinary and difficult times.
Coronavirus and the policy response: what do we want to see?
How, then, should the Government respond? The situation, in terms of how long restrictions are likely to be in place, and what the UK and other governments will do in response, is changing daily. It is right for aviation activity to be curtailed to limit the spread of coronavirus between countries. Possible financial support and possible bailouts for the industry are currently being negotiated.
Here are our thoughts so far on this:
Financial support must be targeted at workers, not airline shareholders
Many staff within the aviation industry will, along with those in many other sectors, be facing sudden loss of income and potential redundancy. The Government should keep under review what extra financial support they may need during the crisis. This should be designed as far as possible to directly benefit staff and not to bail out airline or airport businesses.
The Government should resist aviation exceptionalism
In his statement on measures to be implemented in response to the virus on 17th March Chancellor Rishi Sunak singled out aviation as likely to need a special package of support, alongside the wider offer being made to UK businesses. Aviation as an industry has long been given special treatment, including exemptions and exclusions from a raft of environmental policies and regulations over the decades. We think it’s time to think differently about this.
In terms of the sector’s economic significance or otherwise, as head of the International Energy Agency Fatih Birol has pointed out in the context of government rescue plans being drawn up around the world, “Aviation represents 1% of the global economy but it’s 8% of global oil consumption”. Passenger air travel is a service used by only half of us in any given year in the UK, and even then, most likely for leisure (over 70% of trips are for holidays). Any ‘special’ considerations should instead , surely, be focused on providing the goods and services we use and need every day. And while it is true that airlines will be hard hit by Covid-19, so too will other sectors. It’s hard to see why aviation should be given preferential support compared with, for example, hospitality, leisure or retail.
Perhaps, in fact, the Chancellor has come to a similar view. It’s being reported in the media that Rishi Sunak has written to the industry to say there would be no sector-wide rescue to prevent companies going out of business, and that further taxpayer support for the sector would only be possible once they had exhausted other options including raising money from shareholders, investors and banks.
Recovery plans should focus on building a sustainable future
Before the Coronavirus outbreak, a different crisis had started to make headlines, one with its own communities of vulnerable people, and its own threats to health and security. The impacts of Covid-19 are already proving brutal, but the climate crisis is likely both to be more complex to tackle and to have longer lasting impacts. Just before the virus hit in the UK, we had the historic court ruling that the Government’s approach to Heathrow expansion had failed to consider the Paris Agreement on climate change, and we’d started to see evidence of shifts in the public and political mood around aviation that were opening up conversations about growth, demand and the place of aviation in a zero carbon future. A government consultation on this had been imminent.
We can’t let the Government drop the ball on climate change. To quote Fatih Birol again, “This is a historic opportunity for the world to, on one hand, create packages to recover the economy, but on the other hand, to reduce dirty investments and accelerate the energy transition.” In planning short-term measures such as bailouts, guarantees and tax cuts, politicians need to stay focussed on the longer-term goals of decarbonisation and public wellbeing. Industry loans or moves for Government to buy out parts of the industry must not, for example, lock in incentives to deliver levels of aviation activity that are fundamentally unsustainable. Any financial measures that appear designed to boost aviation demand, such as the removal of Air Passenger Duty (a tax levied not on airlines but on passengers) cannot be justified, even if they apply only once flight restrictions are lifted, as argued for by the AOA.
In terms of jobs, in future, we need more people to be working on zero carbon fuels, carbon capture and storage, railways, and domestic tourism and the Government’s plans need to keep this bigger picture in mind.
What lessons can we take from people’s response to this situation? The current reality – fear, people staying isolated in their homes and avoiding contact with people outside their own family, small businesses failing and streets deserted – is a world away from the vision of personal wellbeing, and of strong and active local communities that motivates many environmental campaigners.
But perhaps there is some hope to be drawn from the fact that governments have acted quickly (if, some argue, not quickly enough) to deal with a global emergency despite economic consequences. Populations have been ready to make enormous sacrifices (alongside some examples of selfish panic buying) for the wellbeing not just of themselves and their families but of people who are more vulnerable. It’s become socially unacceptable to put other people at risk, we’re trying to work out who our neighbours are and how to be neighbourly, and people who have never taken part on online meetings are learning how they work.
How much of this will stick, and how the aviation sector in particularly is impacted in the longer term is hard to predict. We don’t yet know how far the Government will yield to the demands of the AOA to do “whatever it takes to sustain the UK aviation industry”. Some anticipate mass airline closures and bankruptcies, others argue that the industry typically recovers – and resumes its upward CO2 trajectory – faster than expected. Let’s hope that by the time the UK emerges from this horrible crisis we’ll have had the opportunity, during the slowdown in global CO2 emissions, to ourselves slow down and think about the kind of future we want, collectively, to rebuild.
The DfT has quietly published (no press release or announcement – we are in the Covid-19 crisis) a consultation about Decarbonising Transport. The end date is around June, but not specified. Shapps says: “2020 will be the year we set out the policies and plans needed to tackle transport emissions. This document marks the start of this process. It gives a clear view of where we are today and the size of emissions reduction we need.” And, less encouragingly: “We will lead the development of sustainable biofuels, hybrid and electric aircraft to lessen and remove the impact of aviation on the environment and by 2050…” (he actually believes electric planes will make much difference in a few decades??). It also says “Aviation, at present, is a relatively small contributor to domestic UK GHG emissions. Its proportional contribution is expected to increase significantly as other sectors decarbonise more quickly.” And while saying we are working with ICAO on its CORSIA carbon scheme (unlikely to be effective) the document states: “…we would be minded to include international aviation and shipping emissions in our carbon budgets if there is insufficient progress at an international level.” But overall the intention is to let demand for air travel continue to rise. . Tweet
Published 26.3.2020 (no DfT press release – it just appeared ….)
Consultation till about June – no final date has been given (as we are in the Covid-19 crisis, with no certainty about when life might return to a semblance of normality).
Shapps says in the introduction (“Ministerial Foreward”)
… just some extracts of relevance to aviation below:
“We will lead the development of sustainable biofuels, hybrid and electric aircraft to lessen and remove the impact of aviation on the environment and by 2050, zero emission ships will be commonplace globally.”
“As we move towards a net zero GHG emissions transport system, we cannot lose sight of the fact that the UK is on a journey with the rest of the world. Action is needed beyond the UK, and we are in a unique position to demonstrate real leadership domestically, as well as leading change in sectors that require global solutions, such as international shipping and aviation.”
This is the text in the section on Aviation:
Current position of the sector versus historical emissions
2.45 In 2018, UK domestic aviation (flights that take off and land in the UK) was responsible for 1.5MtCO2e of GHG emissions (53). This is a decrease of 6% since 2017, with domestic aviation contributing less than 1% of UK GHG emissions and lower than the most recent peak in 200554.
2.46 International aviation emissions, at 37MtCO2e in 201855, have more than doubled since 1990. The majority of the increase came in the 1990s and early 2000s, however emissions have also been increasing since 2012. There has been an increase of 1% since 2017 (56 – see link ).
2.47 Aviation, at present, is a relatively small contributor to domestic UK GHG emissions. Its proportional contribution is expected to increase significantly as other sectors decarbonise more quickly.
Current government aims and targets
2.48 In December 2018, the Government published the Aviation 2050 green paper that included a range of measures to achieve its 2050 ambitions at the time, including efficiency improvements in technology, operations and air traffic management, use of sustainable aviation fuels and market-based measures. The consultation closed in June 2019 and work is underway on the Aviation Strategy.
2.49 Airport expansion is a core part of boosting our global connectivity and levelling up across the UK. The Government takes seriously its commitments on the environment and the expansion of any airport must always be within the UK’s environmental obligations.
2.50 Domestic aviation emissions are included in the UK’s carbon budgets with international aviation and shipping emissions accounted for via “headroom” within our existing carbon budgets, meaning that the UK can remain on the right trajectory for net zero global greenhouse gas emissions across the whole economy. These international emissions are treated differently, largely because the inherently international nature of both sectors means that it is difficult to attribute these emissions to individual states. It is widely agreed among states that a sectoral approach (rather than state-by-state) is preferable, which is why the Kyoto Protocol gave UN International Civil Aviation Organisation (ICAO) and the International Maritime Organisation (IMO) responsibility for pursing measures to reduce these emissions.
Current policies in place to deliver those targets
2.51 Given their global nature and the absence of any international agreement on how to assign international aviation emissions to individual states, action at an international level is the Government’s preferred approach for addressing aviation’s international carbon emissions.
2.52 The UK is already a respected and influential member of the UN International Civil Aviation Organisation (ICAO). The UK has been instrumental in securing many important environmental agreements including the 2016 Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) agreement – the first worldwide scheme to address CO2 emissions in any single sector – and the CO2 standard.
2.53 ICAO has defined a basket of measures designed to achieve its medium-term goal of carbon neutral growth for the sector from 2020 (CNG2020). This consists of more efficient aircraft technologies as incentivised by the CO2 standard, operational improvements such as more efficient flight procedures, the development and use of sustainable alternative fuels and market-based measures like CORSIA.
2.54 Under CORSIA, qualifying aeroplane operators are required to offset the growth in international aviation CO2 emissions covered by the scheme above average 2019 and 2020 levels. At present, 82 states (including the UK) have volunteered to join CORSIA from the start in 2021, representing over 75% of international aviation activity57. From 2027 to 2035, the scheme will become mandatory, meaning that over the entire lifecycle of the scheme (2021 to 2035), it is estimated that approximately 2.5Gt of CO2 will be offset58. Since 2012, the aviation sector has been part of the EU Emissions Trading System (ETS). According to the European Commission, this has contributed to reducing Europe’s carbon footprint by more than 17MtCO2e per year59. The UK committed in its 2017 Clean Growth Strategy that its future approach would be at least as ambitious as the EU ETS and provide a smooth transition for relevant sectors
2.55 Figure 12 shows our central projection for GHG emissions from international and domestic aviation to 2050. Between 2018 and 2050 demand is projected to increase by 73%. However, emissions reductions per plane and per passenger km are driven by larger and more efficient planes, and limited uptake of low carbon sustainable aviation fuels. This results in aviation GHG emissions projections remaining broadly flat.
Figure 12: Projection of change in combined domestic and international aviation GHG emissions, passenger distance flown and gCO2/passenger km from current policy compared to 1990f60 Index (1990 = 100). GHG Passenger km GHG per passenger km
Planned future work
2.56 Later this year a consultation on net zero aviation will be published. This consultation represents the growth in government ambition since the green paper, including the 2050 net zero target and further CCC advice on international aviation and shipping, and will propose how the Government plan for aviation to play its part in delivering our net zero ambitions.
2.57 Internationally, we are committed to negotiating in ICAO for a long-term emissions reduction goal for international aviation that is consistent with the temperature goals of the Paris Agreement, ideally by ICAO’s 41st Assembly in 2022. At the 40th ICAO Assembly in October 2019, ICAO not only reaffirmed its commitment to CORSIA but crucially, prioritised work towards a long-term climate goal for international aviation.
f Historic emissions are final UK GHG statistics 60. Historic passenger kms are DfT estimates based upon CAA airports data. Aviation forecasts are produced using the DfT Aviation model. The model is an updated version of the model used for the Aviation forecasts 2017. Key updates include revised fleet mix and aircraft efficiency assumptions. In addition, a precautionary approach to airport capacity assumptions was adopted such that these represent an upper bound for carbon emissions, but the approach does not pre-judge any future planning applications or the development of policy (including following the outcome of proceedings e.g. on Heathrow expansion).
2.58 As a responsible national government, we need a contingency measure in case international progress does not go far enough or fast enough. That is why in the Government’s response to the latest CCC Progress Report, we made it clear that we would be minded to include international aviation and shipping emissions in our carbon budgets if there is insufficient progress at an international level.
. Britain hopes to:
• Lead international efforts in transport emissions reduction • Recognise aviation and maritime are international by nature and require international solutions • Harness the UK as a global centre of expertise, driving low carbon innovation and global leadership, boosting the UK economy
Within transport, road transport is the largest emitter of GHG. Cars contributed 55% of domestic transport emissions (68MtCO2e) in 2018; as figure 3 shows, absolute emissions from a number of transport sectors have decreased since 1990, but there have been noticeable increases in emissions from vans and international aviation. (b)
(The image below just has the international aviation and shipping part of a large graphic)
b International aviation and shipping emissions are accounted for via “headroom” within our existing carbon budgets. This is consistent with the Kyoto Protocol which gives two UN Organisations – the ICAO and IMO – responsibility for pursing measures to reduce these emissions. There is no agreed way of allocating emissions to different countries, so our international emissions estimate are based on bunker fuels sales for international flights and journeys.
Gatwick will close its North Terminal and consolidate operations into the South Terminal from 1 April, for a month, due to the lack of demand for air travel because of COVID-19. The runway to be in use between 1400 and 2200 for scheduled flights, but will be available for emergency landings and diversions only, outside these hours. The situation will be reviewed after a month, by 1st May. A decision on reopening the North Terminal will be taken when airline traffic eventually increases and Government public health advice – including on social distancing – is relaxed. Gatwick is hoping to make out that it is being “responsible” in closing, to protect the health of its staff and passengers, while it has been quite happy to have as many flights as it can, to and from other countries suffering high levels of Covid-19 infection, up until now. It is only closing because of the economics, and to “protect its business.” In addition London City Airport has announced that it was suspending all commercial and private flights until the end of April. It is also possible that Birmingham Airport could serve as a mortuary during the Coronavirus crisis. . Tweet
Gatwick Airport will consolidate operations into the South Terminal from 1 April and limit runway opening hours
27.3.2020 (Gatwick Press release)
Gatwick Airport will consolidate operations into the South Terminal from 1 April and limit to protect staff, passengers and the business from the impact of COVID-19
Runway to be in use between 1400 and 2200 for scheduled flights, and remains available for emergency landings and diversions only outside these hours.
Measures to be in place from 1st April for one month, with the situation kept under regular review
The severe and unparalleled impact of COVID-19 on the global aviation sector has led Gatwick to make the difficult decision to consolidate passenger processing and facilities into the airport’s South Terminal and to limit scheduled flights on its runway to between 1400 and 2200, with effect from 1 April 2020.
As a responsible business, the airport has made this decision to protect the health and safety of passengers and staff, and to shield the business following a dramatic fall in airline traffic.
The airport’s operations will be consolidated into the South Terminal and the runway will remain open for emergency landings and diversions only outside these hours.
The temporary closure of the North Terminal will last a minimum of one month and the situation will be kept under regular review. A decision taken on reopening the North Terminal when airline traffic increases and Government public health advice – including on social distancing – is relaxed.
The decision to scale back the airport’s operations has been discussed with the airport’s airline partners and any passengers booked on flights due to depart or arrive at Gatwick during this period are advised to contact their airline.
Stewart Wingate, Chief Executive, Gatwick Airport, said: “Gatwick is a resilient but also responsible business and during these extraordinary times we need to take unprecedented measures to protect the health and wellbeing of our staff and passengers, while also shielding the business from the impact of Coronavirus.
“I would also like to take this opportunity to thank my staff for their continuing hard work through this difficult time and to reassure them that we are taking these difficult decisions now, so that we are in a position to recover quickly and get back to generating jobs and economic benefits for the region and wider economy well into the future.
“During these extraordinary times, we have also seen remarkable acts of kindness and community spirit in support of people who may need some additional help. To add to this, we will also be providing some opportunities so that any of our staff, who have time during this period of reduced operations, that choose to, can help support people in our local communities.”
Gatwick Airport to scale back operations from April as demand collapses due to coronavirus
By REBECCA SPEARE-COLE (The Evening Standard)
Gatwick Airport has announced it will reduce its operations from next month as travel demand collapses due to the coronavirus pandemic.
The West Sussex hub said it will close its North Terminal – one of its two terminals – from April 1.
From then, its runway will also only open for scheduled flights between 2pm and 10pm.
The measures will be in place for a minimum of one month.
Many flights are now set to be cancelled as operations are scaled back, the airport added.
It comes as the global aviation industry suffers devastating losses while countries enforce travel bans and restrictions amid the Covid-19 outbreak.
The UK Foreign Office has issued a travel warning advising Brits to avoid all but essential travel to any country for 30 days.
The Government has also imposed strict lockdown rules for at least three weeks, like ordering Brits to self-isolate at home, and have rolled out harsh penalties for those who break them.
Gatwick’s chief executive Stewart Wingate said: “Gatwick is a resilient but also responsible business and during these extraordinary times we need to take unprecedented measures to protect the health and well-being of our staff and passengers, while also shielding the business from the impact of coronavirus.
“I would also like to take this opportunity to thank my staff for their continuing hard work through this difficult time and to reassure them that we are taking these difficult decisions now, so that we are in a position to recover quickly and get back to generating jobs and economic benefits for the region and wider economy well into the future.”
Gatwick is the UK’s second busiest airport, recording 47 million passengers last year.
Its runway will remain available for emergency landings and diversions outside the new opening hours.
Airlines have suspended the majority of their flights due to demand plummeting and countries around the world introducing travel restrictions in a bid to slow the spread of coronavirus.
London City Airport announced on Wednesday that it was suspending all commercial and private flights from that night.
Flights to and from the east London hub will be suspended from this evening until the end of April.
From next week, Southend Airport will only open on Tuesdays, Thursdays and Sundays between 4.30pm and 9.30pm.
The No 3rd Runway Coalition believe the Government has given its clearest hint yet that it will not support Heathrow expansion. In reply to a question put by Slough MP Tan Dhesi, the aviation minister, Kelly Tolhurst said that “The Court of Appeal has ruled that the designation of the Airports National Policy Statement has no legal effect unless and until this Government carries out a review”. The fresh use of the word “unless” implies consideration has been given to drop the project altogether. The DfT also state that they are focussed on responding to Covid-19 at the moment, which presents further evidence that Heathrow expansion has slipped down the agenda. The Government also say that they “are carefully considering the Court of Appeal’s judgment and will set out our next steps in due course”. However, it is unclear how long is meant by “due course”. Heathrow is struggling, with few passengers, probably having to close one or more terminals, due to restrictions on air travel for an unknown period of time, due to Covid-19. A recent review of senior staff at Heathrow shows no longer a role for overseeing expansion. Heathrow now also appear not to be pushing for the “early release” of 25,000 extra flights, as this would depend on the NPS, which has now been deemed to be invalid, by the courts. . Tweet
FRESH SIGN GOVERNMENT WON’T EXPAND HEATHROW
26.3.2020 (No 3rd Runway Coalition)
The Government has given its clearest hint yet that it will not support Heathrow expansion.
In reply to a question put by Slough MP Tan Dhesi, the Government state that “The Court of Appeal has ruled that the designation of the Airports National Policy Statement has no legal effect unless and until this Government carries out a review” (1).
The fresh use of the word “unless” implies consideration has been given to drop the project altogether.
The Department for Transport also state that they are focussed on responding to Covid-19 at the moment, which presents further evidence that Heathrow expansion has slipped down the agenda since the judgment on 27 February.
The Government say that they “are carefully considering the Court of Appeal’s judgment and will set out our next steps in due course”. However, it is unclear how long is meant by “due course” (2).
This news comes as the project has been dealt a huge blow, with the airport itself placing it under “deep freeze” and undertaking a review of the most senior roles at the airport, with no role for overseeing expansion (3).
Measures that Heathrow have taken since the Court of Appeal judgment include scrapping the proposal to bring in 25,000 more flights per year before any new runway opened (4). They described this as the “early release” of capacity of the 3rd runway (5). As the Airports National Policy Statement is now unlawful, Heathrow cannot seek permission for the release of the extra flights.
If Heathrow were to bring a fresh application forward for these additional 25,000 flights, it would be decided by the local authority – Hillingdon Council – who was one of the claimants in the legal challenge and are against any expansion of Heathrow.
Other measure include:
Entire expansion project put on hold, into a “deep freeze” No fresh consultation on airport’s Masterplan Shareholders want costs controlled given new political risk of the project
Paul McGuinness, Chair of the No 3rd Runway Coalition, said:
“In light of all circumstances, it seems right that the Government is unenthusiastic about resuscitating the Airports National Policy Statement. For as well as being ruled unlawful by the courts, it has become increasingly clear that the full facts about the deleterious air quality, noise, carbon and regional consequences of Heathrow expansion had not been presented to MPs, when it was subjected to parliamentary scrutiny. And even Heathrow’s investors are now expressing cold feet about the project.
Moreover, it’s most welcome that Heathrow has now announced that it won’t proceed with its other plan, for an 25,000 extra flights in advance of a third runway – the prospect of which had been causing such alarm in the airport’s hinterlands. Because our communities are not only saying “No” no a third runway at Heathrow, but “No” to any expansion of flight volumes from what is, statistically, already the world’s most disruptive airport”.
Parliamentary Questions, number 32187, Written Answers, 24 March 2020 https://members.parliament.uk/member/4638/writtenquestions#expand-1186505
2. Parliamentary Questions, number 32188, Written Answers, 24 March 2020 https://members.parliament.uk/member/4638/writtenquestions#expand-1186505
3. John Holland-Kaye, blog to Heathrow staff, 17 March 2020. For full blog, please get in touch.
4. Email sent to members of Board of Airlines Representatives in the UK, 3 March 2020. For more info, please get in touch.
5. BACKGROUND INFO: Currently, Heathrow can’t land two planes on parallel runways at the same time. In order to allow a plane to land on the ‘wrong’ runway, the gap between planes landing on the other runway has to be extended. The introduction of Independent Parallel Approaches (IPA) is an attempt to get around this. The granting of an additional 25,000 flights would have required planning permission from the Planning Inspectorate in order to lift the 480,000 Air Traffic Movement Cap imposed in the Terminal 5 Inquiry. The introduction of IPA would also have required approval for the airspace changes from the CAA. It is not possible to add the 25,000 extra flights without introducing IPA as there is not the flexibility within current landing procedures to land that many extra planes safely on a 2-runway airport.
For more information, contact:
Rob Barnstone on 07806947050 or firstname.lastname@example.org
Rishi Sunak, the chancellor, has written to the airlines and airports, warning that there would be no sector-wide rescue to prevent companies going out of business because of coronavirus. He insisted that further taxpayer support for the sector would only be possible once they had “exhausted other options” including raising money from shareholders, investors and banks. Companies have been told to access funding already announced last week, including monthly payments of up to £2,500 for every employee temporarily laid off because of the crisis. In his letter he said that airlines and airports could only seek “bespoke” support from the Treasury as a “last resort”, with no guarantee of further help. The comments follow criticism levelled at Easyjet after it paid shareholders £174 million in dividends last week, despite appealing for taxpayer support. Sir Richard Branson, has also been attacked after the airline told staff to take 8 weeks of unpaid leave. He has since promised to invest £215 million to support his Virgin Group business. Many airlines may go bankrupt due to the virus crisis. Some of the smaller airports may close, and larger airports partly close temporarily. . Tweet
Don’t expect us to bail you out, Rishi Sunak tells airlines
By Graeme Paton, Transport Correspondent
Ben Clatworthy, Assistant Travel Editor | Charlotte Wace
Tuesday March 24 2020 (The Times)
Airports may have to close temporarily after the government ruled out a comprehensive state bailout for the aviation industry, ministers were told today.
Rishi Sunak, the chancellor, wrote to the airlines and airports this afternoon, warning that there would be no sector-wide rescue to prevent companies going out of business because of coronavirus.
In a letter seen by The Times, Mr Sunak insisted that the aviation industry was “vital” to the nation’s economic recovery and to rescue Britons stuck overseas.
However, he said that further taxpayer support for the sector would only be possible once they had “exhausted other options” including raising money from shareholders, investors and banks. Companies have been told to access funding already announced last week, including monthly payments of up to £2,500 for every employee temporarily laid off because of the crisis.
In his letter he said that airlines and airports could only seek “bespoke” support from the Treasury as a “last resort”, with no guarantee of further help.
The comments follow criticism levelled at Easyjet after it paid shareholders £174 million in dividends last week, despite appealing for taxpayer support.
Sir Richard Branson, the billionaire owner of Virgin Atlantic, has also been attacked after the airline told staff to take eight weeks of unpaid leave. He has since promised to invest £215 million to support his Virgin Group business.
It is believed that the lack of a deal may also be linked to significant disparities between individual airlines and the fact that many are foreign owned. International Airlines Group – parent company of British Airways – is registered in Spain and its biggest shareholder is Qatar Airways.
Hundreds of thousands of British holidaymakers face being trapped overseas as airlines have begun grounding their fleets.
Ryanair confirmed that it expected that most of its flights would now be cancelled until the end of May as growing number of countries imposed lockdowns and restricted the movement of people. It would maintain a “very small number of flights to maintain essential connectivity, mostly between the UK and Ireland”. However, the chancellor’s comments dismayed industry leaders, who accused the government of performing a U-turn on funding for the sector a week after the chancellor floated the suggestion of targeted financial cash to help keep planes in the skies.
The International Air Transport Association (Iata) warned that airlines in Europe would be worst hit by the global decline in travel prompted by the coronavirus pandemic. It said that European airlines were expecting an average 46 per cent drop in income this year compared with 2019.
The Airport Operators Association (AOA) said that passenger numbers at some UK airports were “approaching close to zero” and a number were already considering “shutting down for a period of time” after a collapse in income.
Airports are maintaining operations as hubs for air freight, bases for search-and-rescue operations and to provide links to the offshore oil and gas industry.
However, Karen Dee, the AOA chief executive, said that “all of that is now put at risk by the government’s decision”.
She added: “While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days.
“Not only does the decision today leave airports struggling to provide critical services, it will hamper the UK recovery . . . We urge the government to reconsider and at the very least provide a comprehensive package of support for airports and ground-based services, to ensure the UK’s critical aviation infrastructure is ready to take off once the Covid-19 pandemic recedes.”
The chancellor’s letter to airports and airlines said that the “priority for all companies should now be to reassess their cashflow positions in light of last Friday’s announcement” of support for all sectors of the economy.
Mr Sunak wrote: “Given the significant importance of the aviation sector to our economy and economic recovery, the government is prepared to enter negotiations with individual companies seeking bespoke support as a last resort, having exhausted other options. However, further taxpayer support would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors and discussing arrangements with financial stakeholders.
“Terms would be structured to protect taxpayer interest, and the government would expect to have regard to factors including but not limited to whether the business makes a material contribution to the economic activity of the UK.”
Any shutdown of airports is likely to jeopardise the mission to repatriate Britons from destinations around the world.
On Monday Dominic Raab, the foreign secretary, ordered British citizens overseas to return immediately amid fears most commercial air travel would cease. It remains unclear exactly how many Britons are overseas, although the government has said the number could be anywhere from 300,000 to a million.
Coronavirus: No extra help for airlines, chancellor says
The UK chancellor has told airlines to find other forms of funding and not turn first to the government for help getting through the coronavirus crisis.
Demand for tickets has collapsed forcing companies to ground aircraft.
Aviation bosses have been lobbying the government for a targeted aid package to stop firms going under as a result of the slump in demand.
But in a letter on Tuesday Rishi Sunak said the government would only step in as “a last resort”.
Mr Sunak instead urged airlines to try and raise money from shareholders.
He said the government would only enter into negotiations with individual airlines once they had “exhausted other options”.
But industry group the International Air Transport Association (IATA) warned of an “apocalypse” in the aviation sector as it called on governments around the world for help. The group said annual worldwide revenues from ticket sales would fall by $252bn (£215bn) if travel bans remain in place for three months, a drop of 44% compared to last year.
“Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business,” IATA boss Alexandre de Juniac, said.
“There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.”
Virgin Atlantic, Ryanair and EasyJet have all grounded most of their fleets, while BA-owner IAG has cut capacity by 75% and Norwegian Air has cancelled thousands of flights.
This has also affected airports, which have cut hundreds of jobs across the UK since coronavirus arrived in the country.
Karen Dee, who runs the Airport Operators Association (AOA), said the aviation industry was “surprised” by Mr Sunak’s decision and will have to “fight on its own to protect its workforce and its future”.
“While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days,” she said.
“Not only does the decision today leave airports struggling to provide critical services, it will hamper the UK recovery.”
The chancellor’s stance can be considered a U-turn since he seemed only last week to be ready to regard aviation as a special case. But a lot can happen in a few days and, in the interim, Sunak unveiled his flagship “furlough” scheme to keep workers in jobs by paying 80% of wages, up to £2,500 a month. That’s a huge help for all service industries, airlines included. It ought to be enough for now.
It will also have dawned on the Treasury that major UK operators can withstand a fair amount of temporary financial pain. EasyJet and IAG, owner of British Airways, have boasted about the size of their cash balances and the depth of their credit facilities. Fine, let them use those resources.
Indeed, easyJet gave a perfectly-timed illustration of its riches when it distributed a £171m dividend to its shareholders, including £60m for founder Sir Stelios Haji-Ioannou in Monaco, last week. Those same investors are free to recapitalise their airline should the need arise.
IAG and easyJet, thankfully, seemed to have absorbed the message and are not asking for bespoke deals or bail-outs. Instead, the difficulty for Sunak will come when he’s presented with pleas from weaker airlines and regional airports.
He can only promise pragmatism. It would be hard, for example, to mount an argument for saving a weak airline that couldn’t make profits in the pre-coronavirus age. There would, though, be a decent case for saving regional airports to boost economic recovery, as long as terms were good for taxpayers. But that’s getting ahead of events. In the meantime, the simple message is correct: shareholders and owners need to look out for their own interests.
The world is close to running out of space to store jet fuel that planes do not need, due to the collapse in air travel because of Covid-19 virus. Only about 20% of land-based storage for the product remains — about 50 million barrels. There is now a shortage of places to keep unwanted jet fuel supplies. Unless oil refineries stop producing jet fuel, this will get worse. The aviation industry normally uses about 7 million barrels of jet fuel per day. Demand is down by about a third now, and could fall by 50% in the next few months. Airlines might be able to store fuel cheaply (perhaps $75 per tonne for two months) and save themselves money in future. It is unclear how much oil refineries have cut production. While land based sites may fill up, tanker ships can be chartered to store jet fuel at sea. However, there is a limit how long it can be stored, due to concerns about oxidation, stability and moisture content, and it degrades much faster than crude oil. Global oil consumption is being reduced by the coronavirus; as well as less air travel, many people are driving less. Refineries may switch to producing more diesel.
Glut of Jet Fuel Is on Brink of Overwhelming Global Storage
By Alex Longley, Elizabeth Low, and Jack Wittels (Bloomberg)
22 March 2020
The world is close to running out of space to store all the fuel that jets are no longer burning.
Only about 20% of land-based storage for the product remains — about 50 million barrels — while airlines cut flights, according to Vienna-based consultant JBC Energy GmbH. A collapse in air travel due to the coronavirus pandemic has brought with it a plunge in fuel demand and the threat of a shortage of places to keep unwanted supplies.
The picture looks sure to worsen in the coming weeks and months unless oil refineries take drastic action of their own to cut output. Flight cancellations are destroying demand for the roughly 7 million barrels-a-day market, with some traders speculating consumption could have dropped by as much as 50% of that. Dubai-based Emirates, which runs the world’s biggest airline by international traffic, will suspend most passenger flights from March 25, it said Sunday.
The product has slumped by more than 60% this year and is trading at around $275 a ton for May supply in northwest Europe. More importantly, perhaps, December prices for jet fuel are at about $350 a ton. In other words, if traders can find a means of storing until the end of the year that costs less than the gap between the two months — around $75 a ton — then they can profit from hoarding supplies.
It’s hard to pinpoint exactly when storages would hit tank tops because it’s unclear at this stage precisely how big the hit to aviation demand has been. Also uncertain is the extent to which refineries have already cut production or how much they can do so if required. Storage sites currently dedicated to diesel could be re-purposed for jet fuel — if there’s time and a workforce available to do that.
If either figure is right, and if oil refineries fail to respond by dialing back output, then land-based tanks will start to fill within weeks. While storage companies sometimes have unused space, that doesn’t necessarily mean it’s available for anyone to use. It can be reserved but not utilized.
“We could see floating storage being used as there is no other option,” said Sri Paravaikkarasu, Asia oil director at FGE. “Clearly onshore tank storage is getting filled at this point.”
Traders and shipbrokers report strong interest in booking tankers to keep fuel cargoes at sea.
There are also pockets of buying still. More jet fuel is finding its way to Latin America, where consumption has yet to have the same kind of hit seen in other parts of the world.
Signs of weak demand abound, however. The Colonial Pipeline, the largest fuel-link between the Gulf of Mexico and the East Coast, is lowering flows. The conduit carries multiple products including jet fuel, gasoline and diesel. The Philadelphia-based Trainer refinery, owned by a unit of Delta Air Lines, has shifted from jet fuel production to focusing primarily on diesel.
Analysts say there could be reductions in how much fuel refineries are making. That, though, would only add to challenges in the crude oil market, where an increasing number of tankers are already being booked to hoard barrels because of weak near-term demand.
While global oil consumption is being destroyed by the coronavirus — aside from the collapse in air travel, city lockdowns and quarantines mean people are driving less — Saudi Arabia is flooding the market with oil. The kingdom began aggressively adding barrels after Russia rejected its proposal to curb output and help shore up a glut.
Jet fuel’s premium to crude, its so-called crack spread, has plunged to about $8 a barrel in northwest Europe. That could mean even less refining, adding to an oversupply of crude.
“Jet fuel cracks have been hit the hardest as flights have been grounded to halt the spread of the coronavirus,” according to Rui Hou, a research analyst at Wood Mackenzie Ltd., adding that sluggish demand for transport fuel is generally bad for refining margins. “Consequently, refiners are likely to cut the crude runs to get through the tough time.”
— With assistance by Serene Cheong, Alaric Nightingale, Jeffrey Bair, Ann Koh, and Javier Blas
Majors look to store jet fuel at sea as air travel drastically curbed
By Ron Bousso, Stephanie Kelly, Laura Sanicola (Reuters) 18.3.2020
LONDON/NEW YORK (Reuters)
Major oil companies including BP and Shell are preparing to take the rare step of storing jet fuel at sea as the coronavirus outbreak disrupts airline activity globally, while refiners are shifting to diesel because of the poor margins associated with jet fuel production.
Jet fuel demand has cratered as airlines suspend flights due to the coronavirus pandemic, which globally has infected more than 204,000 people and killed 8,700, prompting travel restrictions from governments around the world, including the United States. Market participants and refiners have had to scramble to adjust to incredibly low prices.
Storing jet fuel at sea, however, is something of a last resort. The product is sensitive to contamination and degrades more quickly than other refined fuels and especially crude oil, so after a few months, it no longer can be used for aviation, according to analysts.
“The industry generally expects products will be used within three months of being produced,” said George Hoekstra, an independent consultant specializing in hydroprocessing technology.
Gulf Coast jet cash prices were at 26.50 cents per gallon below futures, the lowest seasonally since at least 2011, the earliest data available, Refinitiv Eikon data showed.
Jet fuel demand averages about 8 million barrels per day, but that has already dropped by about 20%, according to Robert Campbell, head of oil products at consultancy Energy Aspects.
Overall, the oil market could see a record build in supply in April that could overwhelm storage capacity within months, analysts said.
BP has provisionally booked the 60,000-tonne Stena Polaris tanker to store jet fuel for 40 to 60 days starting March 20 to March 22 at a rate of $25,500 a day, according to shipping and trading sources.
A BP spokesman declined to comment.
Royal Dutch Shell has provisionally booked Torm Sara to store jet fuel for 90 to 120 days, sources said.
“With European kerosene (jet fuel) stocks near record levels, floating storage is one possibility for surplus jet fuel, though due to strict quality specifications, traders will be reluctant to attempt long-term storage of surplus fuel given the risk of contamination,” Campbell said.
Demand for jet fuel storage has also increased in the United States, said Ernie Barsamian, founder and chief executive of The Tank Tiger, a terminal storage clearing house based in Princeton, New Jersey.
SHIFTING THE MIX
Storing refined products is more difficult than storing crude oil due to concerns about oxidation, stability and moisture content,
Some U.S. refiners have decided to blend jet into the diesel pool, which is currently more profitable. A small amount of jet fuel can be dropped into diesel in crude distillation towers at a refinery, which separates raw crude oil into products with different boiling points.
Refiners can also choose to adjust their fluid catalytic cracking units to yield less gasoline and more distillate.
“We are putting everything we can into diesel,” said one refining source, who wished to remain anonymous.
The move could be oversupplying the diesel market in some regions of the United States, however, traders said. Cash prices for diesel have fallen despite the impending spring planting season for farmers, which typically boosts diesel demand and prices.
U.S. Gulf Coast cash prices for ultra-low-sulfur diesel have fallen this week to 6 cents per gallon below the futures contract, traders said, the lowest seasonally since 2016.
Reporting by Ron Bousso and Jonathan Saul in London and Stephanie Kelly, Laura Sanicola and Devika Krishna Kumar in New York; Editing by Mark Potter, Sonya Hepinstall and Leslie Adler
The FT has reported that the UK government is preparing plans to buy equity stakes in airlines and other companies hardest hit by the coronavirus crisis, after being warned that the economic packages it has announced so far will not be enough to save them. This is still in discussion. The plans would see the UK taxpayer inject billions of pounds into companies including British Airways in exchange for shares that would eventually be sold back to private investors. The airlines, unlike companies selling essential items, currently have almost zero customers – taking holidays and leisure breaks is no longer desirable, or indeed, permitted. So the airlines and airport will have almost no income. The government plan for the airlines is “an infusion of capital in exchange for equity.” That is safer for the government than a loan, that may never be repaid, even when airlines get back to operating nearly normally. Many airlines already have huge debts. They cannot borrow more commercially. Some airlines wanted state loans and tax relief, but that might not be enough during asustained shutdown in the global aviation industry. The US might also take equity stakes in their domestic airlines. . Tweet
UK government draws up plans to buy into airlines
Taxpayer injection for British Airways and other companies in return for shares
A UK official confirmed that talks were taking place which could see the state end up with equity stakes in British airlines
By David Crow in New York and Jim Pickard in London
The UK government is drawing up plans to buy equity stakes in airlines and other companies hardest hit by the coronavirus crisis after being warned that the economic packages it has announced so far will not be enough to save them.
The plans would see the UK taxpayer inject billions of pounds into companies including British Airways in exchange for shares that would eventually be sold back to private investors, according to three people briefed on the proposals.
Two of the people said the government was contemplating the move after being warned by bankers that the support it has already unveiled — including £330bn of loan guarantees — would not be enough to stave off the collapse of companies that had seen their revenues all but evaporate.
“They are coming up with a Tarp-like programme for certain industries like the airlines,” said one of the people, referencing the US troubled asset relief programme that was rolled out during the financial crisis to support American banks.
“There are certain industries where there will need to be an infusion of capital in exchange for equity,” they said. “The challenge with a loan is if you make a loan to a company with no revenues, then accounting will say it’s impaired.”
They added: “For those companies that are really virtually shut down because of this virus a loan in many ways is not going to work.”
The person said that, in addition to airlines, “at some point the government will need to think about all the industries and businesses that might be severely impaired”.
“The airlines are obvious, but there will be others,” they said.
A second person briefed on the plans said that some companies had entered the coronavirus crisis with too much debt which would restrict how much extra borrowing they could take on.
They said: “The key is to address the companies that will require some equity capital on top of loans, as the financial structure of each company has limits to accommodate more debt, depending on their sector and existing financial structure.”
One of the people warned that the proposal was complex and might not come to fruition.
One UK official confirmed that the talks were taking place and admitted that the state could end up with equity stakes in the airlines. He said the government was being advised by bankers from Rothschild, the investment bank.
However, he cautioned that while the Tarp-type scheme was being discussed the final outcome could turn out to be “more complicated”.
Some airlines had been hoping for a more conventional rescue involving state loans and relief on airport charges and air passenger duty but ministers believe this would not necessarily be enough to keep them afloat during a sustained shutdown in the global aviation industry.
Aviation executives made those demands at a meeting with ministers on Wednesday.
Grant Shapps, the UK transport secretary. promised this week that the government would not allow the collapse of “world-leading, well-run, profitable” airlines and said an announcement would be made imminently.
Policymakers in the US have also raised the prospect of taking equity stakes in their domestic airlines.
A stimulus bill unveiled by Senate Republicans earlier this week earmarked $50bn in loans and loan guarantees to airlines. But it also said the government could take stakes in the companies through different kinds of securities in order to participate in the “gains” of its investments.
A spokesperson for British Airways declined to comment.
Additional reporting by James Politi in Washington
CHICAGO/WASHINGTON (Reuters) – U.S. airlines called on Friday for a government stimulus package to help them weather the coronavirus crisis by providing payroll protections, warning that around 750,000 jobs depend on the airline industry.
A Republican proposal introduced in the U.S. Senate on Thursday would grant up to $50 billion in secured loans, but bars the cash grants the airlines had requested, spurring intense discussions between airlines, unions and congressional aides over the shape of the aid.
“Loans alone are not sufficient and should be coupled with a worker payroll assistance program and targeted tax relief which will allow airlines to keep operating through this crisis,” industry body Airlines for America said in a statement.
United Airlines Holdings Inc (UAL.O) and American Airlines Group Inc (AAL.O) displayed a united front with their unions, together asking employees to write letters to Congress urging action.
Chicago-based United warned that without sufficient government support by the end of March, it would have to start cutting its payroll to match a 60% schedule reduction planned for April, saying “time is running out.”
Late on Friday, United said it was now cutting 95% of its international flights in April, including suspending all flights next month to Canada, Europe, Central and South America and Africa and nearly all flights in Asia.
Airlines have already raised capital, suspended share buybacks, cut executive pay, slashed flights and grounded jets to reduce costs and preserve cash during a steep erosion in air travel demand.
Even with those “self-help measures,” Delta Air Lines Inc (DAL.N) Chief Executive Ed Bastian said on Friday his airline was burning through $50 million in cash each day. Delta expects its revenue to fall by $10 billion in the second quarter from a year earlier.
U.S. President Donald Trump has said he stands ready to support the industry, but the idea of a bailout has met with a backlash from some critics who argue the airlines should have saved more cash for a rainy day, rather than rewarding shareholders.
“Whatever they ask for will be very controversial,” said Al Koch, vice chairman of AlixPartners, who was involved in the restructuring of General Motors in 2008-09. “It’s one thing for Trump to say we’ll stand behind airlines, and another thing for Congress to enact something into law.”
Meanwhile, union groups continued to lobby for any stimulus package to guarantee protections for frontline employees.
To protect workers, Association of Flight Attendants-CWA President Sara Nelson is pushing for direct payroll subsidies for employees, ranging from wheelchair assistants and gate agents to mechanics and flight attendants.
In a letter to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer on Friday, a dozen lawmakers said that basic protections for frontline workers, including contractors, were “a moral obligation,” but added that airlines should not receive “a blank check.”
Talks in Congress concluded Friday without an agreement, but congressional negotiators will resume talks on Saturday.
Easyjet seeks state loans — but pays Stelios £60 million
Friday March 20 2020, The Times
Easyjet will go ahead with a £174 million dividend payout to shareholders despite appealing for taxpayer support.
The airline said that it might need lines of credit or loans from the government to cope with the coronavirus crisis. It insisted last night, however, that this would not affect the payout, £60 million of which will go to its founder, Sir Stelios Haji-Ioannou.
Easyjet gave no indication that it would ask those investors to help the business.
Including the latest dividend, the airline has made shareholder payouts of more than £1.8 billion since 2012. Of that dividend bonanza, in which the company is committed to paying 50 per cent of its earnings to shareholders, Sir Stelios, 53, and his family interests have received nearly £650 million.
The Greek-Cypriot, who controls 34 per cent of Easyjet shares, was silent yesterday when asked whether the dividend payment should go ahead. A spokesman said he would not make any comment.
It is understood that the airline took legal advice on whether it could withdraw or postpone the dividend. Johan Lundgren, its chief executive, told BBC radio that the payment was “something that we are legally obliged to do”. Scores of other stock market listed companies are withdrawing or reconsidering their annual payouts.
A spokesman for Easyjet said that the airline was not looking for a taxpayer bailout. Mr Lundgren said: “We are looking for loans on a commercial basis. We are not asking for free money.”
European travel restrictions have led Easyjet to ground more than 100 aircraft and start to save money by putting its staff on unpaid leave.
• British Airways pilots are to take a 50 per cent cut to their basic salary for April and May, split over three months, as the airline tries to cut costs. It will mean the 4,500 pilots take two weeks of unpaid leave for each of the two months, the Financial Times reported.
International Energy Agency (IEA) head Fatih Birol is calling on heads of state and international financial institutions to make Coronavirus recovery plans sustainable. He says political and financial leaders have “a historic opportunity” to usher in a new era for global climate action with economic stimulus packages. These stimulus packages are a critical opportunity for governments to “shape policies” in line with climate action. This is a great opportunity to focus, instead of on fossil fuels, on clean energy technologies and accelerating the transition away from fossil fuels. Currently huge sums are spent on keeping the price of fossil fuels low. Instead, now is a unique historic opportunity. This includes the aviation sector, which represents 1% of the global economy but 8% of global oil consumption. When plans to reinvigorate economies get going, they must address climate breakdown; including financial stimuli using low interest rates for low carbon electricity is key – and funding carbon capture and storage technologies. Governments need to increase the production of climate-proof jobs, avoiding jobs in “stranded asset” fossil fuel industries.
Political and financial leaders have “a historic opportunity” to usher in a new era for global climate action with economic stimulus packages to confront the coronavirus pandemic, the head of the International Energy Agency (IEA) has said.
In an interview with Climate Home News on Tuesday, Fatih Birol said stimulus packages to prop up economic recovery marked a critical moment for governments to “shape policies” in line with climate action.
“I am talking with several governments and international financial institutions leaders because they are all busy designing stimulus programmes for the economy – the plans they will put together will be extremely important,” he said.
“This is the reason I am telling them that we can use the current situation to step up our ambition to tackle climate change.”
Birol said he had urged political and global financial leaders to design “sustainable stimulus packages” that focus on investing in clean energy technologies and accelerate the transition away from fossil fuels.
“This is a historic opportunity for the world to, on one hand, create packages to recover the economy, but on the other hand, to reduce dirty investments and accelerate the energy transition,” he said.
The health crisis has hammered the economy in the week since the World Health Organisation declared coronavirus a pandemic. Stock markets have seen some of their toughest days of trading, sparking fears of a global economic recession.
“The global economy is going through very difficult times and the energy sector is disproportionately affected,” said Birol. “Aviation represents 1% of the global economy but it’s 8% of global oil consumption.”
“I understand that when I talk to governments, they are very much preoccupied with the current economic turmoil but we should keep the eye on the ball that is addressing climate change,” he said.
Birol was speaking before reports in US media that President Donald Trump would be seeking an $850 billion stimulus package, including $50 billion for airlines.
Last year, a report by UN Environment found the world needed to cut emissions by 7.6% per year until 2030 to limit global warming to 1.5C by the end of the century – the tougher temperature goal countries committed to under the Paris Agreement.
In most recent years, global emissions have increased but they stagnated in 2019, according to an IEA analysis.
Birol insisted 2019 could mark a definite peak in emissions, but only if governments seized interventions to recover from the impacts of the coronavirus as the moment to gear the economy towards a green transition.
“It may well be the case that we will see 2020 emissions decline. In my view, this is not a reason to celebrate because emissions reduction should be the result of right energy policies,” he said.
In a statement last week, Birol wrote that such policies could include large-scale investments in clean energy technologies such as solar, wind, hydrogen and carbon capture and storage technologies.
The massive investment plan outlined by Birol echoed proposals such as the EU Commission’s “green deal for Europe” aimed at accelerating the shift of capital towards the green economy while creating climate-proof jobs.
The IEA estimates annual fossil fuel consumption subsidies are worth $400 billion worldwide, 40% of which are used to make oil products cheaper.
Birol expressed optimism governments could bend the emissions growth curve this year because of a number of favourable factors.
An IEA analysis found that 70% of global energy investments is driven by governments directly or indirectly as a response to policy. Meanwhile, the low cost of clean energy strengthens the economic case for the clean energy transition to drive stimulus packages.
“This is a huge opportunity we cannot miss,” he said. “Here the issue is not only the level of money [dedicated to stimulate the economy] but the direction of the money,” he said.
The coronavirus outbreak has sent the aviation industry reeling from one of its biggest economic shocks in recent years.
But the virus is also putting the finger on one of the industry’s most difficult challenges: curbing the sector’s increasing greenhouse gas emissions from a baseline of 2019 and 2020.
As part of goals to limit emissions, members of the International Civil Aviation Organisation (Icao), the UN body responsible for aviation, have agreed an “aspirational goal” to make all growth in international flights after 2020 carbon neutral.
Under the plan, countries have agreed to use a market-based offset mechanism known as Corsia to mitigate emissions from flying. Offsets are the primary tool to curb the sector’s emissions with alternative fuels and energy efficiency technologies not developed at scale.
The resolution to establish Corsia adopted in 2016 states that the sector’s growth should be offset compared with a baseline of average total emissions for 2019 and 2020.
But with thousands of flights grounded because of the coronavirus, emissions from aviation are anticipated to fall this year, reducing average emissions over the two years.
If traffic rebounds in coming years, growth from the baseline will be bigger than previously expected, forcing airlines to do more to offset emissions than they would if flights in 2020 were unaffected by coronavirus.
Last week, the International Air Transport Association (IATA) said it anticipated revenue losses for passenger business of between $63 billion and $113 billion. Airline share prices have also been hit hard by the outbreak, now considered a pandemic by the World Health Organisation.
“Emissions can rebound next year from the coronavirus situation,” Annie Petsonk, aviation expert at Environmental Defense Fund, told Climate Home News, adding “airlines could have more to offset” emissions growth.
On the other hand, “the coronavirus paired with concerns about climate change could mean that people will act more carefully about getting to places in the future,” she said.
Separately, Petsonk wrote in a statement that Icao was likely to come under pressure to “change the fundamentals of Corsia” to ease the financial hardship for airlines.
That could include calls to revise the 2019-20 baseline. “This would be a dangerous mistake because it might trigger a reconvening of the 190+ member countries of Icao’s Assembly to renegotiate the hard-fought 2016 resolution,” she wrote.
From January 2021, only flights between countries which have volunteered to participate in the Corsia system will have to compensate for the growth in their emissions. From 2027, offsetting obligations will become mandatory for all international flights.
On Friday, Icao’s council – a body of 36 countries, including the world’s largest air travel manufacturing and infrastructure nations – is due to start discussing which of 14 carbon offset schemes airlines will be allowed to use during the first three-year voluntary stage. The meeting is due to last until 20 March.
The decision is key to the integrity of the Corsia scheme in delivering real emissions reductions since it will impact the quality and quantity of offsets that airlines will be able to buy to cancel out the growth of their emissions.
The inclusion of credits from the Clean Development Mechanism (CDM), a carbon market set up under the Kyoto Protocol, is a concern for observers and campaigners, who fear this could flood the market with billions of cheap credits that have not actually achieved emissions cuts.
A 2016 EU-commissioned report found that just 2% of CDM projects were highly likely to ensure “additional” emissions reductions.
Icao’s Technical Advisory Body (TAB) made a set of recommendations to the council, which have not been made public. Climate Home News understands that at least six of the 14 schemes that applied have been judged eligible to be used under Corsia.
Campaigners have called on Icao to publish the TAB recommendations, warning against the risk of a back room deal and the politicisation of the decision.
In a letter, the International Coalition for Sustainable Aviation warned the council its decisions and “the transparency with which you make these, puts the credibility of aviation’s climate efforts in the global spotlight”.
The start date to accept offset projects could have a key impact on the scheme’s integrity.
A study by Ecosystem Marketplace found that starting the crediting period in 2013, would allow for a billion tonnes of carbon credits from the CDM to become available under Corsia.
That is the equivalent of six to ten times airlines’ foreseeable demand, according to Ecosystem Marketplace.
Another option, reportedly being considered by Icao, is to include offsets that were based on emission reduction activities that have taken place between 1 January 2016 and 31 December 2020.
“A lot of people began developing projects in 2016 explicitly because Corsia was announced that year,” said Steve Zwick of Ecosystem Marketplace.
An analysis by Carbon Market Watch found that credits currently available on the voluntary markets, which exclude credits from the CDM for instance, are enough to cover Corsia’s demand well into 2025.
“This would leave five years for new projects to start and generate credits for the rest of Corsia,” Gilles Dufrasne, policy officer at Carbon Market Watch said, insisting eligibility should been defined by the quality over quantity of credits.
In its letter, the ICSA has called on Icao’s council members to exclude any offsets from projects which were started before 2020.
ICSA also called on the council to ensure emissions reductions are not double counted by both the airline buying the credits and the host country benefiting from the project.
There is still no international agreement on avoiding double counting emissions reduction after countries failed to agree on the issue at the last UN climate talks in Madrid in December.
In the Covid-19 international virus crisis, the airline industry has been they key means by which the virus has spread rapidly, to almost every country. But the industry has been primarily concerned with its own economic interests. There is much more the aviation industry could have done, earlier on, to limit the spread of the disease. The Canadian news website, Ricochet, says only by the 9th March did ICAO’s council finally adopted a declaration affirming “the urgent need to reduce the public health risk of the spread of COVID-19 by air transport,” but the damage was already done. Instead of limiting flights as much as possible from the start of the COVID-19 epidemic, ICAO lobbied to delay the adoption of health measures that could harm air traffic. They stressed the role of governments in directing the health checks etc on travellers, avoiding discouraging air travel by those who were likely to have been in contact with infected people. Doing that would have reduced passengers, and thus income and profits for the sector. On Feb 4th ICAO warned governments about imposing “additional health measures that may significantly impede international [air] traffic.” By then the first cases of infection had already been declared two to three weeks earlier in travellers who came from China, most of them by plane. . Tweet
Air travel has rapidly spread COVID-19, but industry has been reluctant to limit flights
Private economic interests prioritized, even at the cost of public health
Analysis by André Noël (Ricochet) MARCH 14, 2020
In this 21st century, airplanes are the main vectors of global epidemics. But during the COVID-19 crisis, the airline industry has been primarily concerned with its economic interests. This article has been translated and adapted from a piece originally published by Ricochet’s French edition.
“Global air traffic networks play a key role in the global importation of emerging infectious diseases”
The role of aviation in the spread of epidemics in the 21st century has been recognised by the scientific community for many years. Yet instead of limiting flights as much as possible from the start of the COVID-19 epidemic, the International Civil Aviation Organisation, an advocacy agency of the United Nations that is headquartered in Montreal, lobbied to delay the adoption of health measures that could harm air traffic.
In a Feb. 4 statement on COVID-19, the International Civil Aviation Organisation warned governments about imposing “additional health measures that may significantly impede international [air] traffic.” [See below** ]. By then the first cases of infection had already been declared two to three weeks earlier in travellers who came from China, most of them by plane.
The organization was wrong to urge governments not to limit air traffic as the virus began to spread outside of China, according to a French expert.
“Frankly, it was not the right message to have,” says Alain Barrat, director of research at the French National Center for Scientific Research and co-author of an article entitled “The role of the airline transportation network in the prediction and predictability of global epidemics,” published in 2006 in the Proceedings of the National Academy of Sciences.
“Global air traffic networks play a key role in the global importation of emerging infectious diseases,” notes a group of of researchers that includes individuals from the University of Virginia’s Biocomplexity Institute & Initiative in a Feb. 25 article on the current COVID-19 epidemic. (Authored by more than 30 people, the article is available online prior to approval for publication.)
In recent years, airplanes have been involved in many cases of transmission of contagious diseases such as severe acute respiratory syndrome (SARS), influenza, smallpox and measles, reports Alexandra Mangili of the Tufts University School of Medicine in Boston.
As winter ends, COVID-19 is already well established in many countries and is now spreading within communities, said Barrat during a Skype interview with Ricochet from Marseille, France, on March 12. But at the start of winter, planes were a very important carrier of the virus and the aviation industry could not ignore it. The International Air Transport Association, which represents most of the world’s major airlines and is also based in Montreal, participated in a study by Barrat and his colleagues on the role of airplanes in the spread of infectious diseases.
“When the Iranian government became aware of the epidemic in China, it took no steps to limit trade and air travel.”
Epidemics have regularly erupted over the centuries, notably the plague in the Middle Ages, but they spread more slowly, said Barrat. With airplanes, the flow and the speed are much greater: “We have numbers of people who are displaced every day over great distances,” he said. Today, epidemics, like SARS or COVID-19, “are spreading along the aviation network,” which “completely changes the dynamics.”
The researchers at the University of Virginia’s Biocomplexity Institute & Initiative and their co-authors also report in their article that the coronavirus quickly spread outside of China via the air network. Wealthier people travel by plane, and the study notes that countries reporting COVID-19 cases are mainly developed countries, such as Italy and South Korea.
Iran, a less affluent country also affected, is a special case, but here too aviation is at issue, suggests Dr. Amir Khadir, a specialist in medical microbiology at Pierre-LeGardeur Hospital in the suburbs of Montreal. COVID-19 first appeared in the holy city of Qom, and hundreds of Chinese students of Islamic studies regularly make roundtrip flights there from their hometowns. “There is a lot of travel and trade between Iran and China,” said Dr. Khadir, who is of Iranian origin. “When the Iranian government became aware of the epidemic in China, it took no steps to limit trade and air travel.”
“Governments are machines that respond slowly to a crisis”
And it seems no government could count on the International Civil Aviation Organization to get it right. On another issue — that of the climate crisis — this United Nations agency has been regularly accused of not defending the public interest and instead serving as a lobby for the powerful aviation industry.
The fact that planes spread epidemics very quickly has a major impact on public health networks, as it leaves governments little time to take action, said Barrat.
“Governments are machines that respond slowly to a crisis,” he said. “With regard to an epidemic, we know that we are going to have exponential growth, which at first seems slow and which becomes very fast. And when you start having a lot of cases … we have to take the measures that are being taken, but it would have been better if we had done it before.”
Barrat is not surprised that the International Civil Aviation Organization, which has a mandate to support civil aviation, did not want rapid and radical measures that could have hampered air traffic at the start of the epidemic.
“It is obvious that the first concern when the number of cases [of infection] is still low is to say ‘well, we must not kill the economy too much.’ But then we realize that it might have been nice if we had been a little more reactive before.” If they act in time, authorities can limit the spread of the virus and ultimately avoid taking catastrophic measures that hurt all aspects of the economy. In hindsight, the call by the International Civil Aviation Organization not to hinder air traffic at the start of the epidemic was not the right message.
On March 9, the International Civil Aviation Organization’s council finally adopted a declaration affirming “the urgent need to reduce the public health risk of the spread of COVID-19 by air transport,” but the damage was already done. The statement also said that organization is concerned “about the economic impact of the COVID-19 outbreak on air transport and civil aviation.”
Here is an ICAO press release about Covid-19 on 2nd February 2020, that illustrates the points made above:
Update on ICAO and WHO Coronavirus Recommendations
Montréal, 4 February 2020 –
ICAO press release
In light of the increasing number of cancelled and rerouted flights now arising due to Coronavirus fears, as well as the implementation of additional travel measures for passengers, ICAO wishes to encourage all governments and airlines to keep informed of the latest travel and health recommendations being issued by the World Health Organization (WHO) and follow these recommendations.
Updated WHO advice and recommendations, in addition to related bulletins issued by ICAO, the CDC, and other regional and international aviation organizations, are all freely accessible to any officials or the general public through the ICAO CAPSCA Coronavirus web page.
ICAO would further remind national governments of their obligation under the International Health Regulations (IHR) to inform the WHO of their public health rationales and justifications when implementing additional health measures that may significantly interfere with international traffic, [see link ] within 48 hours of their implementation. We support its calls to all countries not to impose restrictions inconsistent with the International Health Regulations, and for more rapid collaboration between the public and private sectors to develop the diagnostics, medicines, and vaccines we need to bring this outbreak under control.
WHO guidance material is based on expert and reliable information, and informed by the need to maintain a sustainable and supportive environment in the face of associated health and travel risks. Exceeding its recommendations without having conducted an appropriate risk assessment could lead to unnecessary and negative impacts, especially for the many vulnerable or isolated populations which rely so importantly on their global aviation connections.
States’ implementation of the Standards and Recommended Practices (SARPs) that relate to the preparedness and management of public health emergencies is essential. These are contained in:
– Annex 6 to the Chicago Convention – regarding universal precaution kits;
– Annex 9 – regarding compliance with the International Health Regulations and facilities required for public health measures at airports;
– Annex 11 – regarding contingency plans in the event of potential disruption of services;
– Annex 14 – regarding aerodrome emergency plan for public health emergencies;
– Annex 15 – regarding requirements for flight crew advisories; and
– PANS-ATM – regarding procedures for reporting suspected communicable diseases.
Resources for Editors
A specialized agency of the United Nations, ICAO was created in 1944 to promote the safe and orderly development of international civil aviation throughout the world. It sets standards and regulations necessary for aviation safety, security, efficiency, capacity and environmental protection, amongst many other priorities. The Organization serves as the forum for cooperation in all fields of civil aviation among its 193 Member States.
and ICAO press release on 14th February, that says:
Montréal, 14 February 2020 – The International Civil Aviation Organization (ICAO) has conveyed new advice to its Member States urging them to review and implement applicable civil aviation standards and recommended practices relevant to communicable disease response.
It also reminded national governments of the publicly and globally accessible COVID-19 online travel and health advisories which have been issued relevant to the outbreak by ICAO, the World Health Organization (WHO), the U.S. Centers for Disease Control (CDC), and other aviation and international organizations.
In its most recent State letter, the UN aviation agency urges States to implement relevant provisions of Annex 9–Facilitation to the Chicago Convention, to act on formalizing their membership in ICAO’s Collaborative Arrangement for the Prevention and Management of Public Health Events in Civil Aviation (CAPSCA), to effectively establish a National Air Transport Facilitation Committee, and to clarify the roles and responsibilities of public health and civil aviation authorities during outbreaks, in order to support the continuous, safe, and orderly operation of global air services.
Heathrow contractors have been told to down tools, with work put ‘on hold’ until there is further clarity on any plan for a 3rd runway. It is unlikely to make any progress during the Covid-19 recession, when the number of people flying has been cut to just tiny numbers, and the situation likely to last for at least several months. This comes after the Court of Appeal ruling (27th February) that the Airports NPS is illegal; Heathrow is trying to appeal against this, to the Supreme Court, with a decision on whether to allow the appeal by mid April. Now the delays to the runway plans, if it ever happens, have increased by perhaps another year – due to the Coronavirus. The date when it might be ready has slipped from 2026, to 2029 (due to the CAA decision) to about 2030 (due to the Appeal Court) to about 2031 (due to Coronavirus)…. so it is looking less and less likely. The airport will lose huge amounts of money, due to the virus, unless government bails it out – and that is widely NOT seen as a sensible use of government funds, when millions of people also need financial help, due to Covid-19. . Tweet
Heathrow expansion ‘frozen’ with hundreds of jobs at risk
Contractors have been told to down tools, with work put ‘on hold’ until there is further clarity
By Oliver Gill 14 March 2020 (Telegraph)
There are fears that the building of the third runway at Heathrow will slip off the public agenda during a coronavirus recession
Heathrow’s controversial expansion is in “deep freeze” with hundreds of jobs at risk amid industry fears that the building of the third runway will slip off the public agenda during a coronavirus recession.
Airlines have been warned that Heathrow is facing a series of hurdles that, at best, require an additional delay of “at least” one or two years and will require costs to be “slashed” in the meantime, according to an internal correspondence from a major trade body.
An email from the Board of Airline Representatives to its members read: “Heathrow expansion is now in the deep freeze until the Government comes forward with when, how, or if it intends to revise the [policy documents] required for Heathrow.
“Given the date for a third runway had already been pushed back to late 2028 or early 2029, then we are now looking at 2030 and beyond should the Government proceed.”
Heathrow has played down a High Court ruling blocking its expansion last month despite. A spokesman for the airport insisted that the judges’ verdict, which ruled the Government’s decision to give the scheme the go-ahead, was unlawful and “an eminently fixable issue”.
The Government has decided not to appeal the ruling, leaving the airport to challenge the ruling in the Supreme Court.
Hundreds of workers have been hired to lay the foundations to Heathrow’s extension, which has already cost the airport hundreds of millions of pounds. [Surely rather foolish of Heathrow, to be so presumptuous. They were well aware of the Court of Appeal process, so were unwise to assume they could start work, well even before the start of the Development Control (DCO) order process. AW comment]
In the email contractors have been told to down tools, with work put “on hold” until there is further clarity on the project’s future.
Meanwhile, Grant Shapps, the Transport Secretary, made no reference to Heathrow during a speech at the Airport Operators Association annual dinner last week, causing speculation that it is was no longer a key priority for ministers.
The Prime Minster once pledged to “lie down in front of the bulldozers” to prevent the building of Heathrow’s third runway.
A Heathrow spokesman for Heathrow said: “The High Court ruling has meant there will be a delay in realising the benefits of Heathrow expansion until the Government remedies an eminently fixable issue.
“Failure to fix it rules out airport growth anywhere in the country and casts doubt on other infrastructure projects, including roads and housing pledges made by the Government.
“Heathrow has already taken a lead in getting the UK aviation sector to commit to a plan to get to Net Zero emissions by 2050, in line with the Paris Agreement and we are ready to work with the Government to help deliver their agenda to level up the country and deliver a Global Britain.”
John Holland-Kaye and his executive team will forfeit part of their salaries as the crisis deepens, Sky News learns.
By Mark Kleinman – City editor @MarkKleinmanSky
Tuesday 17 March 2020
Heathrow Airport’s boss is to forgo his salary for the next three months as Britain’s busiest passenger hub tries to navigate the crisis which threatens to bring the global aviation industry to its knees.
Sky News has learnt that John Holland-Kaye, Heathrow’s chief executive, is to work without pay until June – the latest in a string of aviation bosses who have agreed to cut or waive salaries as the coronavirus hammers air travel.
The move means that Mr Holland-Kaye will not receive more than £185,000 of his £751,000 annual basic pay.
A source close to Heathrow confirmed the move on Monday, adding that Mr Holland-Kaye’s senior executive team had agreed to forfeit a month’s salary.
Mr Holland-Kaye’s gesture has emerged days after Heathrow reported a near-5% fall in passenger traffic in February.
Steeper year-on-year falls are anticipated this month, as an increasing number of governments ban inbound international flights and airlines ground vast proportions of their fleets in response.
Heathrow, which has also implemented a recruitment freeze during the crisis, has agreed to waive parking fees to allow airlines to hold grounded aircraft at the airport for the duration of the crisis.
On Monday, Britain’s biggest carriers all announced steep capacity and job cuts as they face their gravest crisis for years – or, according to many analysts, the most serious in the industry’s history.
British Airways is expected to make public details of flight cuts and a first wave of redundancies as soon as Monday afternoon, according to insiders.
Its parent company, International Airlines Group (IAG), told the London Stock Exchange that it would reduce capacity in April and May by 75%, and reduce other operating expenses.
The company added, however, that its balance sheet boasted total liquidity of more than €9bn, placing it among the world’s financially strongest airline groups.
Rival Virgin Atlantic announced that it would ground 80% of its flights before the end of the month, and that staff would be asked to take eight weeks’ unpaid leave.
BA and Virgin depend to a significant extent on their transatlantic traffic, meaning that many of their routes will be inoperable until after the US lifts the travel embargo from the UK that comes into effect on Tuesday.
Sky News revealed at the weekend that Peter Norris, chairman of Virgin Atlantic Airways’ majority shareholder, Virgin Group, was writing to the prime minister to warn that the airline industry needs immediate financial aid to survive.
Insiders said Mr Norris’s letter – which is also understood to be being signed by Shai Weiss, Virgin Atlantic’s chief executive – would ask the government to provide airlines with a credit facility to help them finance themselves through a potentially protracted period of negligible revenue.
That support, which the Virgin chairman estimates would be worth between £5bn and £7.5bn across the industry, would include cash advances and guarantees, as well as other measures to ensure that credit card companies do not continue to hoard revenue from airline bookings.
Under Mr Norris’s blueprint, this emergency financing would be repaid once trading returns to more normal levels.
One source close to the airline, which was founded by Sir Richard Branson in 1984, said that Mr Norris would also ask the PM to extend the timetable for allowing airlines to keep planes grounded without losing their prized take-off and landing slots for the entire summer season.
The latter request is significant because it reflects the growing belief among aviation bosses that the sector may not begin to stage a recovery until the autumn.
If those fears are realised, it will have a substantial impact on Heathrow’s revenues, with the airport also facing a reduction in turnover from the shops and restaurants which trade there.
EasyJet and Ryanair also announced big capacity cuts on Monday, with the latter indicating that its entire fleet is on the verge of being grounded.