That Was The Week That Was 28 Sept – 02 Oct
A week when the industry got doses of reality right, left and centre, and some centre-right MEPs did too
There has not been much good news in aviation recently. Eurocontrol regularly publishes updates on traffic figures. The web page should come with a trigger warning – the data is not for the feint-hearted. The one bright corner seems to be the unmanned area and UAMs – Urban Aerial Mobility vehicles – in particular. UAMs are flying taxis. They can have a set of initials if that is what it takes to get investors involved. And some very interesting investors are getting involved. General Motors, Hyundai and Toyota, to name just a few of the interesting recent entrants that have thrown their hat into the ring. But, yet again, Eurocontrol has brought a dose of reality to the hype. On Monday it published a survey of the state of readiness of its member states for U-Space – a basic building block for managing what is currently uncontrolled airspace and uncontrolled hype-space too. Another trigger warning is appropriate. Progress is slow. For each of the 15 elements required for U-Space, only about 20% of states claim the steps are completed and about 50% say they are in progress.
Flying taxis may be the future but Tuesday got us back to the new normal of now, with a bump. We are of the view that there are three options for the aviation industry at the moment (discussed in detail in the Aviation Intelligence Reporter this month). There is a bailed-out-forever model; there is a public utility model; and a very different, very restructured model. As a general comment, the airlines are more than happy to be bailed out for ever – although money given to them as equity or loans, and thus requiring paying back, is less attractive then this week’s wheeze, which is for states to pay for testing. At the optimistic cost IATA put forward of $10.00 a test, even if only a million passengers fly each day you can see that this will quickly add up. It would be cheaper to build a tunnel across the Atlantic. Still, you have to admire the chutzpah of being so brazen about promoting this shell-and-pea trick. The second model, one of a heavily regulated utility is not attractive to many in the industry, despite what some more sober observers see as its inevitability, but it should be no surprise that it is attractive to the regulators. And right on cue, out they came, those foot soldiers of regulation, Members of the European Parliament. First cab off the rank was the wonderfully named Dutch MEP Vera Tax who wants to know what the Commission is doing to ensure a Europe-wide regulated fair price for flights. To their credit, the Commission played that one away. This is going to run and run. By the end of the week, there was more to fight back…
For the sake of completeness, it should be noted that the third model, the very restructured model, is even less popular, despite, in our view, it being the only sensible long-term solution.
You may recall that last week we noted that after twenty of so years of belligerent inaction, now that the Functional Airspace Blocks are under attack from the Commission, the FABs, like bears coming out of hibernation, are waking up, and they are very angry. Wednesday saw an entire newsletter (hagiography perhaps a better word) for the good deeds that FABEC has done. No, sorry, I mis-type. All the good deeds FABEC will do at some point in the future. It is all upside now, clear blue sky, now there is a downside being mooted of actually being required to change. If this was any more transparent it would need to be etched on glass. That is particularly the case given that ICAO released a chart showing the true revenue positions for ANSPs. The decision to invest in PR, now, now, when this is the situation is an interesting one.
In better news, at least for history buffs, BA has announced that it will resume services to Bermuda – think of it as Bermuda III, which will be helpful if the fully regulated aviation-as-utility model comes about. If we see lots of aviation regulators suddenly announcing on Twitter that they are off to Chicago, it might be time to really worry.
It is an ill-wind that blows no good, so you might be interested to know that those labourers for all that is true and honest, those fighters for justice and equality, the banks, see an opportunity in the current crisis. JP Morgan is to set up a futures market for frequent flyer points. You will be able to trade points, hedge points and play all sorts of other games with them. So we have that to look forward to. All those fancy pants banks need to do now is work out how to earn more of them.
When Othello is being defamed by Iago in front of Desdemona’s dad, the Duke of Venice tells Iago to stop his nonsense. ‘To vouch so is no proof’ he notes. Six very wise words. It is a pity that so few writers of press releases seem to know them. On Friday, were he with us, the Duke would no doubt have needed to use them again, because not one trade association, not two, but three trade associations claimed in their own, identical, press releases that ‘pressure intensifies’ for testing not quarantine. Really? At the same time, states around Europe announced further quarantines and increased border restrictions.
But in better news for the industry, the MEPs were at it again, this time three Spanish centre-right, centre-right MEPs of the PPE group; Rosa Estaràs Ferragut, Pablo Arias Echeverría and Gabriel Mato. They jointly asked what the Commission was doing about the risk of ticket prices going up. Nothing, the Commission said. As it should. Quite right, even if it was not the answer the centre-right wanted.