Managing Director of ASM, John Grant, evaluates what next for the Aviation Industry?
As an industry we probably thought a few weeks ago that we had experienced every possible commercial challenge that could be thrown our way. In the last three years we've had the global recession to contend with, escalating fuel costs that peaked in the summer of 2008; Swine Fever and increasing taxation of air travel to contend with. Ironically as spring finally arrived in Northern Europe we've been thrown one hopefully last challenge to contend with in the shape of volcanic ash...when will it end?
In terms of commentary on the events of the last week in Northern Europe much has already been written and such is fluidity of events that information changes almost by the minute. Perhaps the most impressive factor has been the depth of coverage and the speed with which information has been passed around the world on this issue. The internet and social chat forums have once again come into their own in the last few days.
So, once the dust has settled what happens next?
As an industry we've collectively shown our resilience to such events before but even in the darkest moment's post 911 we never saw such a closure of air space as we have seen this week. Those revenues lost by airlines are lost forever and will impact every balance sheet for the rest of this year and beyond. Calls for some form of Government support are well founded, given the amount of taxation imposed on the industry by various agencies it would be at the very least a reasonable gesture to expect some of those funds to be used to support the industry in a time of need.
The additional costs of protecting passengers stranded overseas has been disproportionate to the initial revenue value of those travellers; a £100 passenger to Tenerife costing some airlines up to ten times that value in protection costs. Those numbers don't add up for any business, even the sometimes crazy airline industry and perhaps we should now seriously consider some form of insurance bonding scheme for all scheduled passengers as exists in the tour operating environment. That of course won't help anyone impacted by this weeks events.
Looking forward, we need to rapidly restore confidence in the integrity of our collective decision making around such circumstances. Getting revenues back into the system is vital and yet in many parts of Western Europe consumer confidence and purchasing power remains diminished. Can we perhaps seek a break on environmental and departure taxes for the next six months so that we can recover those discretionary traveller's? Certainly in the UK on domestic services the 'double whammy' of departure tax has played a pivotal role in the reduction in demand and in some cases vulnerability of essential air services.
In the last week the importance of aviation to the global economy has been fully realised; ask the Kenyan vegetable farmer; the British Tourist or the ASM delegates still trying to get to Adelaide! Politically our industry is vital to the global recovery we all crave; so, in closing the message seems pretty simple. Collectively we need a sympathetic response from the authorities and perhaps just for once give us a break rather than seeing us as an easy source of fiscal revenues.
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