TWTWTW 22 June to 26 June
A week when everyone wanted someone else to pay…
Some 8,884 flights crisscrossed the European network on Monday, about double the number of two months ago, so for green lobby Transport & Environment this marked the perfect time to invigorate its campaign for the introduction of a tax on jet fuel. An EU-wide tax would raise up to €6.3 billion a year, but that would require unanimous approval by the EU-27. Realising that is not in the cards, certainly not now, T & E lowered its target to try make its case and convince the unwilling. According to its new Aviation Tax Tool, a tax of €0.33 per litre of fuel burned on flights between Germany, France, Italy, Spain, the Netherlands, Belgium, Luxembourg, Sweden, Denmark and Finland, outermost regions excluded, could cover 59% of pollution from flights within Europe and raise €3.7 billion a year for “governments’ coffers.” Apparently, T &E is now not only concerned about climate but also national budgets. We applaud. Footnote: the calculations are based on traffic projections for 2030 made by IATA and Boeing last year, thus before COVID-19 halted air traffic and caused a crack in the growth curve. The initial assessment that that passengers numbers will rapidly bounce back once the global health crisis has passed, and again break records like in the aftermath of global shocks such as the 2008 financial crisis, the September 11 attacks, the Gulf War and the SARS outbreak, looks increasingly optimistic, due to the global span and duration of the pandemic, combined with the expected economic downturn.
Good news for the many –MANY– passengers for whom EU261 has proven to be totally ineffective and are still waiting for a cash refund for their cancelled flights. The European Parliament and Council negotiators reached agreement on the bloc’s first EU-wide rules on collective redress. The directive will allow consumers to join forces, domestically and across borders to lodge group actions when companies, e.g. an airline, break the law, e.g. EU261, to obtain compensation for damage for the harm caused. The directive is not yet in force though. This is the EU and this is a directive, meaning member states will have 24 months following the text’s publication in the Official Journal of the EU to transpose the directive into their national laws, and an additional six months to apply it.
On Tuesday, as the World Tourism Organization announced that Europe is leading the way in starting to easy travel restrictions and full border closures now are reduced to 26% of all destinations in the region, news started to leak out —not coincidentally via the New York Times—that the US might remain on the EU list of countries from which inbound travel will continue to be banned when the bloc reopens external borders July 1.
Wednesday saw Europe’s airlines, ANSPs, airports and OEMs drop old and new feuds, and unite in the name of the environment. Or, more accurately, in the name of securing public funding to achieve their environmental aspirations and obligations. Some 13 associations sent an open letter to EU commissioners and ministers, urging them to ensure that aviation’s climate obligations are allocated sufficient funds of other people’s money when the EU (again) deliberates Next Generation EU and the new Multi-annual Financial Framework. ICYMI: Next Generation EU is the European Commission’s much debated proposed €750 billion long-term EU budget to repair damage from Covid-19 and prepare for the next generation and the new MFF is the EU’s equally much debated proposed €1.13 trillion budget (prices 2018, when the European Commission first proposed the new MFF) for the period 2021-2027. “Due to the current dramatic revenue losses across the entire air transport eco-system in Europe, it will be challenging to achieve timely and ambitious investments into climate action. Public support for the decarbonisation of European civil aviation, as well as other public support measures, are therefore important now, more than ever,” the heads of the trade bodies claimed. They identified five key areas across the system that should receive public funding, including measures toboost the production and take-up of sustainable aviation fuels; a “green incentive” scheme to encourage airlines and aircraft operators to replace older models with more fuel-efficient types; and investments in sustainable airport and heliport infrastructure. The groups want more public funding for Clean Aviation and SESAR research, in addition to a temporary 100% public funding for the deployment of SESAR technologies with proven sustainable and environmental benefits. It doesn’t hurt to ask.
Thursday was Victory Day for Lufthansa. The powerful German aviation group won shareholder support for its €9 billion bailout at a virtual extraordinary general meeting, after its largest single shareholder Heinz Hermann Thiele dropped his objections to terms of the rescue package. We can’t fail to wonder why the billionaire investor—owner of world’s leading manufacturer of braking systems for rail and commercial vehicles Knorr-Bremse and co-owner of railroad equipment maker Vossloh—suddenly changed his mind and no longer had an issue with the German government’s 20% direct stake and board representation. Anyhow, Lufthansa boss Carsten Spohr was a happy man and even publicly pledged to refund passengers for their cancelled flights. We wait.
In contrast, Ryanair group CEO Michael O’Leary was not a happy camper.”This is a spectacular case of a rich EU member state ignoring the EU treaties to the benefit of its national industry and the detriment of poorer countries. Under the pretext of Covid-19, the German government is giving Lufthansa a bank-breaking bailout of €9bn which even the airline’s own CEO admits it does not need”, he blasted, vowing to challenge the European Commission’s approval of the deal Lufthansa bailout to the EU General Court.
Friday saw KLM reveal its long-awaited bailout deal with the Dutch government. The airline will get €3.4 billion, comprising a 90% state guaranteed revolving credit facility of €2.4 billion and a direct state loan of €1 billion. The package still needs approval of the Dutch parliament and Brussels but received the support from the board of its parent, Air France-KLM. Of course, it did. The €3.4 billion bailout comes with strict conditions on lowering operating costs and employee salaries, and thus conveniently transfers the blame for any painful restructuring from management to the government. Even better. In relative terms per citizen, the Dutch bailout is more generous than France’s bailout of Air France, Ryanair calculated. “16 years after Air France’s takeover of KLM, every Dutch citizen now has to pay €200 each to prop-up Air France-KLM, while each French citizen will only pay a subsidy €100. This is a poor deal for the “trading nation”, which likes to lecture other EU countries about fiscal rules but has no problem breaking these rules when it comes to subsidising KLM”, O’Leary remarked. You have to love the Irish wit!