This Was the Week That Was 27 April – 1 May.
A week of letters.
On Monday, the postman delivered open letters from Airlines for Europe (A4E) and its regional counterpart, European Regions Airline Association (ERA), to Europe’s policy makers. Meanwhile staff at Airbus were still trying to recover from the letter sent by their CEO Guillaume Faury informing them that the aircraft manufacturer was “bleeding cash at an unprecedented speed” and the “survival of Airbus is in question if we don’t act now.” The message: expect lower aircraft production rates, expect furloughs and redundancies, expect salary cuts. The virtual informal meeting of EU ministers of tourism concluded with no conclusion other than that something must be done urgently and jointly to save an industry that represents 10% of the EU’s GDP and provides jobs for almost 12% of employees in the bloc.
Tuesday saw Lufthansa playing hardball with the German government and snubbing the conditions that Angela Merkel and her team sought to attach to a €9 billion rescue program. Rather than paying 9% interest on a state-guaranteed loan and having the government sit on its board and acquire a blocking minority stake — reportedly of up to 25% — Lufthansa started considering a more creative scenario that would allow it to push through necessary reforms without too much government meddling: entering the Schutzschirmverfahren or “protective shield” insolvency proceedings. Talks with the Belgian government on a €290 million bailout to Brussels Airlines were not going that well either, prompting Lufthansa group boss Carsten Spohr to get into letter writing mode and send a letter to Prime Minister Sophie Wilmès insisting the proceeds would not flow to the German group’s flagship carrier. The Belgian tax payers’ money would be used for the Belgian airline. In the UK, British Airways CEO Alex Cruz decided not to beat about the bush and told his employees, yes, in a letter, the harsh truth that the airline industry will not return to what it was pre-Covid-19. “There?is no government bailout standing by for BA and we cannot expect the taxpayer to offset salaries indefinitely. Any money we borrow now will only be short-term and will not address the longer-term challenges we will face,” Cruz wrote in a letter to staff. Up to 12,000 workers, almost a third of BA’s total workforce, could lose their jobs.
Getting out of letter writing mode, Transport Commissioner Adina Valean told members of the European Parliament Committee on Transport and Tourism that she remained unwavering; the law is the law, and that applies also to EC 261/2004. “I am aware that some member states are allowing operators to provide vouchers as an alternative to direct reimbursement, even though this is not compatible with EU rules”. Changing the infamous air passenger rights regulation is “not an option” for the Romanian commissioner. That was then.
Wednesday saw a masterpiece of airline lobbying surface at the informal (video)conference of EU transport ministers. A group of 12 EU member states, led by the Netherlands and France, two countries that bailed out their beloved Air France and KLM to a tune of €9 billion –a remarkably familiar number in Berlin – put pressure on fellow member states and the European Commission to consider a temporary amendment of 261. They want to relieve airlines from their obligation to fully reimburse cancelled tickets in cash and allow them to do what they are already doing, namely issue vouchers instead. Some member states opposed changes to the current rules, but others joined the group of the willing — enough for a qualified majority in the Council. That was the easy part. Getting the backing of the European Parliament is another story. The chair of the TRAN committee, Karima Delli, did not lose any time to give her opinion of the matter: “On passenger rights, the Commission guidelines underline that the EU rules on passenger rights should strictly apply. Passengers cannot be doubly victimised by the pandemic, by forcing them to accept vouchers instead of reimbursement.” It is impossible to write off further letters being exchanged.
Thursday saw Commission Executive Vice-President Margrethe Vestager siding with Commissioner Valean on 261 and doubting the fairness on consumers of a refund suspension. “There are many passengers who would need the money. People may have lost their jobs, they may need money for medication, to pay their rent,” she told Euronews. Asked if the proposal would amount to European citizens being forced to pay twice to bail out airlines given that many governments have already announced large sums of money to help national carriers, Vestager replied: “You can say that, yes.”
Meanwhile, Lufthansa became the first major European airline group to make face masks mandatory onboard flights of all its airline subsidiaries, a practice cleverly marketed a couple of days earlier by U.S. low cost carrier JetBlue as “the new flying etiquette.” As trade-off, Lufthansa Group is scrapping social distancing rules and will no longer keep the neighbouring seat free in economy and premium economy. Who said the mouth/face covering requirement was driven by care for the wellbeing of passengers? Load factors, my dear Watson.
Friday was Mayday and saw the debate—and worries of the industry—of social distancing requirements heating up, with Heathrow CEO John Holland-Kaye dismissing the idea as physically impossible “in any form of public transport, let alone aviation” and the UK’s GMB union insisting the airport must enforce social-distancing to protect staff and passengers. The week ended where it began, with another letter and another headache for Lufthansa. After all, letters beget replies. In her reply to Spohr, the Belgian PM made clear that any state aid to Brussels Airlines would come with conditions and guarantees on growth and employment, additional investments, the preservation of Brussels airport and environmental targets.