That Was The Week That Was 30 November – 04 December
All politics is local politics: local politicians get in on the state aid bandwagon
Better to build back the way it was week
It was state aid for the little guys’ week, this week, the week that was. Anyone can do big and showy state aid for national champions. Real politicians, the best, most likely to get re-elected politicians, know that all politics is local politics. Giving complete fortunes to the national carrier is welcome, and it has a certain feel-good tinge to it, but there are drawbacks. First, unless you are the member for the seat that national carrier has its major airport in the middle of, the benefit of that aid – benefit here measured as photo-op moments; name in the local paper; bragging right benefits, are limited. Everybody wants a share of the glory. Politicians are not good at sharing. And, let’s face it, most national airlines are not universally loved by the nation. BA is not only known as ‘Bloody Awful’ abroad.
We have had state aid for the big guys. That is getting boring and predictable. Now is the time for the local politicians, the real down-there-at-the-coal-face politicians to have their day in the sun. The vaccine is on the horizon, Christmas is coming too. There is no time to lose! The window is closing, so it was a very busy week.
Monday kicked the festivities off with an announcement that the Commission approved a Danish scheme to support flights between Bornholm and Sønderborg, but only for ‘certain categories of passengers’. Nice ones, perhaps? What about those that voted for us in the last election? No, this is not about those voters, it is about voters that will vote for the politicians that made this largesse possible in the next election: €1.3 million is a good start. Local politics at its most local. Still, mark my words, this will not be the last time you see the word ‘connectivity’ in a press release about state aid.
Oh, wait, no, here it is again, in the announcement on Tuesday that the Commission had also approved Croatia’s granting of €11.7 million in state aid to Croatian Airlines to compensate it for losses arising as a result of the Coronavirus pandemic. With no disrespect to Croatia, or Croatian Airlines, this is nearly as local as the aid given in Denmark. Not quite, but nearly. Still, fear not, our Croatian readers, the grant is a maximum amount and is subject to audit to ensure that only the losses attributable to the pandemic are compensated. Given that Croatian Airlines was not the rudest of health going into the crisis that will be an interesting audit. Still, it will be audited by one of the no doubt skilled and attentive auditors that do audits for all the other firms you read about in the papers… what could possibly go wrong there? There is no chance of local factors being brought into calculation as the money is distributed and accounted for.
Two days not in the limelight is about all that the major airline associations can bear to withstand, so the big boys roared back on Wednesday with a joint statement demanding – ask for; requesting; wanting, are all too soft for this release – demanding that the world pay attention to their demand that quarantines be lifted on all air travellers, even out-of-towners, not just locals. The release came on the back of the release of new EASA guidelines that are aimed at generating a coordinated and sensible response around Europe. It looks, in its own words, at finding ‘effective and differentiated strategies’ to enable informed decision making. Who would not vote for that? The issue is more the way that IATA, the A4E and ACI Europe chose to represent this: they claim that EASA rejects quarantine, on the grounds that transmission of the virus is already widespread. EASA’s report notes that on-board transmission is low, so the issue is the destination you are arriving into that matters, and that should be a question of individual choice, given the current transmission rates.
Try telling that to the authorities in countries were transmission has been effectively stopped, such as Australia, Japan, Korea, New Zealand, Taiwan and Vietnam which all demand a fierce quarantine. The school of thought that says ‘Everybody already has it, so what the hell?’ has some work to do to convince the rest of the world.
Still, that attitude will help with intra-European tourism, which is just as well, because we also learnt on Wednesday, from the latest UNWTO report, that tourism destinations are slowly reopening – it says about 70% are now open again – but that restrictions remain. Notwithstanding the airlines demanding that Europe reopen, the UNWTO finds that Europe and the US are leading the way in reopening their tourism destinations. Asia and the Pacific, on the other hand are not doing so. So what does that tell us? That tourism in Europe is rebounding, but if the cries from the airlines are to be believed, tourists are not getting to those destinations by plane.
Or, to put that in terms of the local politics involved, locally, the SMEs that sustain local tourism are recovering, but the big picture, who nobody votes for, is struggling.
And then, as if on cue, Iceland got into the game too. Iceland Air, with its sixth freedom flights long before the invention of Emirates should be regarded as a totemic force for liberalisation in air transport, but that little slice of aviation history is at risk of being forgotten. So, like their marauding Viking forebears on Thursday Iceland Air came to get approval, pursuant to the EFTA process, for its US$108 million grant. Iceland can lay claim the oldest parliament in the world but its members too need to be re-elected from time-to-time.
Nothing screams local like local tourism, and nothing screams state aid like Italy – see Alitalia – so it came as no surprise that Friday saw the announcement of the approval of two separate schemes funnelling aid into Italian tourism. First came the approval of €625 million for an Italian scheme to support tour operators and travel agencies and then moments later, the announcement that €500 million had been approved to support activities in the ‘historic centres of the most touristic Italian cities’. This is the circular economy at work. It is also photo-op heaven, as the politicians that can dole out the aid – someone else’s money – and get photographed in front of a national monument whilst doing so. That is a photo-op all local politicians crave.