Airports “will fail in weeks” without injecting money for baggage companies, the government warned
Airports will collapse within weeks without emergency funding for the companies providing baggage handlers and refueling planes, the government has been warned.
Groundhandlers, which supply 25,000 staff across the UK to manage the most vital airport operations, last week told Secretary of Transport Kelly Tolhurst that they are ‘dangerously close to collapse’ and likely to run out of money within six weeks.
The four largest UK companies – Swissport, Menzies Aviation, WFS and Dnata – are said to have fired thousands of employees after a 95 percent drop in sales as a result of 11 partial or full airport closings, including Gatwick, Manchester, London City and Teesside International.
Sources said that unless the treasury steps in with a bailout, companies will be forced to fire their entire workforce, meaning they will be categorized as temporarily absent.
This leaves no ground crew to handle cargo, including critical fan components and other critical medical supplies for the NHS. Listed on the FTSE 250, Menzies fired half of its global workforce last week.
In a joint letter sent to Tolhurst last week, the bosses of the four major groundhandlers called for emergency relief to cover corporate rates, as well as granting VAT exemptions and access to short-term loans.
The letter, which The Mail saw on Sunday, said: “We survive … according to a pay-as-you-go model that generates revenue based on the number of airplanes we support, tons [of goods] we warehouse, and liters of fuel that we pump.
“Since 95 percent of these flights fail to arrive and 70 percent of our costs are personnel, the resulting drop in sales has put us in crisis.”
The correspondence added: “If any of us stop working, the impact will be devastating for all of us, rendering the entire British aviation system inoperable.” The four companies held talks with the Transport department last Friday.
The department reportedly lobbies for help with the Treasury. The Airport Operators Association, which represents more than 50 airports, also asked the government for support last week.
In a letter to Chancellor Rishi Sunak and the DfT, the AOA said airports are not eligible for schemes that benefit retail and hospitality and cannot apply for loans from the Bank of England.
The organization called for six support measures to keep airports open, including a holiday with taxes such as corporate rates and corporate income tax, and access to Bank of England loans.
Last week, the Treasury rejected pleas for an airline rescue plan, saying it would only consider aid if all other roads were exhausted. It is believed that the failure of major airlines to form a united front was a factor in the government’s decision, with a source describing ‘feud’ between rivals Virgin Atlantic and owner of British Airways IAG.
The AOA said it was “extremely disappointed” by the government’s decision to “backtrack” on its previous commitment to stand behind the airline industry.
An airline insider said Covid19’s travel restrictions will last until at least September. He added, “Airlines should plan a longer disruption period before returning to some sort of new normal.”