National reactions to the post-WTC collapse in air travel and tourism have varied widely in the form they take, but in almost all cases involve dishing out money, sometimes disguised as tax cuts and sometimes given straight.
This is easier outside the EU, which has trussed up its governments by outlawing State Aid in an attempt to force national flag-carriers into the market-place as part of the liberalisation of the air traffic sector. The US and Canada were quick to react with aid packages to their air transport industries, and Mexico is now planning urgent measures after a respected Mexican economist estimated the slowdown would slash the country's $8bn tourist industry by 25%, apart from the damage to airlines Mexicana and Aeromexico, which lost $16.5m in the week following the US attacks.
Members of the ruling National Action Party have proposed a three-month reduction in the cost of heavily taxed jet fuel, equivalent to savings of $54m, and Eduardo Sojo, the presidential economic adviser, said the emergency package would include tax breaks for hotels, which have seen occupancy rates fall by as much as 70%.
Astonishingly, the airlines have just agreed sweeping wage increases in the face of threatened strikes. On Friday, Aeromexico agreed to an 11.05% for pilots, while Mexicana flight attendants received an 8.5% hike.
That might not be allowed in the EU, where officials in Brussels are
agonising over whether to permit obviously illegal support from national
governments for their collapsing airlines or whether to be the instrument
of tens of thousands of job losses. It's ironic that after 10 years of
close infighting with national airline lobbies to achieve precisely that
result, the EU should lose its nerve at the crucial moment when the over-padded
airlines are finally being made to face reality.
The last two days have seen the Swiss, Belgian and Irish governments all reaching for their pocket books (ie the taxpayers) to bail out their airlines.
The Swiss government on Tuesday urged the banks backing the partial rescue of parts of bankrupt Swissair to provide liquidity to the carrier to allow it to continue operating. The plea came after the Swiss carrier grounded all aircraft indefinitely after it failed to secure further funds to continue operating and warned that more jobs were at risk. The federal government nobly said it would step in to provide emergency liquidity if the banks failed to heed its call. The carrier said it could not say when it might resume operations and warned that the decision would put "far more jobs at risk" than the 2,650 job losses announced on Monday.
Swissair had already decided to suspend its services to Brussels on Tuesday
for fear of having its aircraft impounded there by the Belgium government.
It was due on Wednesday to inject $119.2m into Sabena, the first tranche
of its contribution towards a $200m recapitalisation plan agreed with
the Belgian state in August, which the EU knows it ought to ban. The payment
won't be made, and the Belgian government was holding emergency meetings
throughout the day to try to devise a way of extending a bridging loan
to Sabena, in a way that would not contravene EU rules. At least the airline's
staff have recognised reality - sort of - by suspending strikes that were
causing random flight cancellations all last week.
In Ireland meanwhile Aer Lingus says it may have to cut back operations by even more than the 25% already indicated. Minister for Public Enterprise, Ms O'Rourke, has warned that the company is in such poor financial state that Government intervention cannot save 700 jobs the airline intends to cut. Aer Lingus is refusing to comment on further cuts or on the possibility of Government help in advance of a board meeting nest week. Although the airline will not pay a 5.5% increase due staff under the Programme for Prosperity and Fairness this month, it is committed to pay £38 million in awards already conceded in full, and it has still to strike a deal with its 550 pilots. Union SIPTU, which represents most of the airline's staff, is maintaining a hard line with the company, confident that the government will step in to rescue the airline when push comes to shove. Yesterday, Ms O'Rourke said the Government would only consider State aid on the basis of a tough restructuring plan.
While the rest of Europe gets to grips with reducing costs, the Spanish government has amazingly decided to raise the approach tax airlines pay to airports by 10% next year. The finance ministry attributes the move to an increase in air traffic and airport security costs. Spanish public airports authority AENA made Pta18.951bn from the approach tax in 2000, up 62.8 per cent on 1999 and expects to get more than Pta20bn this year.You have to wonder what newspapers the finance ministry has been reading. No doubt, in another part of Madrid, transport ministers are locked in anxious discussions with Iberia officials about an aid package.
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