Airlines flying in European airspace will not have to pay air traffic control fees for the period of February to May until later this year or early in 2021. The financial aid measure was brokered by Brussels-based intergovernmental agency Eurocontrol over the course of the past week and will provide the airlines with some much-needed financial breathing space.
Saving up to €1.1 billion in cash
In a package deal agreed on by Eurocontrol’s 41 member states on Tuesday, airlines flying in European airspace will be allowed to defer payment of air traffic control charges due for February through May. Payments will not need to be made until later this year, or early in 2021. This will allow airlines to save as much as €1.1 billion ($1.2bn) in cash.
The measure has been implemented in an attempt to offer some financial relief to already stressed airlines who are battling with the global downturn in travel demand.
‘@eurocontrol States have agreed a package enabling airlines to defer €1.1 billion in air traffic control fees. Vital support to the airline industry in their time of need. https://t.co/JpJpj2QCao @A4Europe @IATA @Transport_EU @ECACceac @CANSOEurope @EBAAorg @eraaorg @icao pic.twitter.com/RSFnwdhPc6
— Eamonn Brennan (@eurocontrolDG) April 7, 2020
Eurocontrol receiving distress signals
Eurocontrol is an intergovernmental organization based in Brussels that coordinates air traffic flow across the region. It is also responsible for collecting route charges from carriers on behalf of its member states. It announced the agreement on the rescue packages with a press release issued yesterday. Eamonn Brennan, Director General for Eurocontrol said in a statement,
“With traffic down 90%, our Member States have clearly recognised the shared challenge. This payment deferral will ease the immediate burden on airlines and it provides certainty on financial planning to both airlines and the air navigation service providers (ANSPs) on when payments will be made after the crisis has abated.”
In addition, the Eurocontrol DG said that many airlines had contacted Eurocontrol to say that they would not be in a position to facilitate their next payments. He further noted that arranging the relief measure had been complex and challenging, but that he felt his agency had been “relevant and helpful” to the industry in this time of crisis.
Delayed payments until 2021
As reported by Forbes, the bill for en-route ATC charges for the European system totaled €518 million ($563m) in February, and invoices were raised mid-March. Payment was due by the 13th of April for disbursement to individual states. Member states have now agreed to defer that bill until November and to delay payment of charges for March, April, and May until 2021.
“This is exactly the kind of solidarity which the industry needs to show during this period of deep and unprecedented crisis. Once the COVID-19 restrictions start to be lifted, Europe will need its airlines to be in good enough shape to be able to jump-start the economy. This charges delay will help make a big difference in that cause,” said Rafael Schvartzman, IATA’s Regional Vice President for Europe in response to the deal.
Cargo flights with passenger aircraft
While regular commercial traffic is down by 90% over Europe, there has been a significant increase in the number of passenger and other non-cargo aircraft declaring CARGO on their Flight Plan. There are now up to 180 such flights per day, according to Eurocontrol data, which is four times as many as the usual number.
The amount of medical supply flights being operated might have something to do with it. Images have surfaced showing boxes of medical equipment strapped to passenger seats, and unique flight routes are being operated to bring back supplies from China.
With the European commercial aviation industry at risk of losing close to €70 billion ($76bn) as a result of the coronavirus outbreak according to IATA, €1.1 billion may not seem much. But at times of severe liquidity shortages, it may just help alleviate some of the most acute burdens airlines are facing.
What other measures do you think could alleviate financial distress for the airlines during this crisis? Let us know in the comments!