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Aviation Update: Examining the Final Report from the Aviation Recovery Taskforce

30 July 2020

It is Summer time in Ireland, which would usually mean large numbers of flights departing and arriving from and to our airports. COVID-19 has severely impacted our economy and in particular the travel and aviation industries. The Taskforce for Aviation Recovery, appointed by the Irish Government in June has produced its final report. It sets out recommendations and priorities to restore and restart aviation services in Ireland and emphasises the necessity to support aviation to the benefit of the entire economy. It has a vital position and its contribution to rebuild Ireland’s international connectivity is essential. Aviation is one of the last sectors to be dealt with by the Irish Government’s COVID-19 response and the Taskforce explains the necessity to support aviation to ensure the preservation of Ireland’s leadership position in global aviation. In this article, we review the report and outline the recommendations proposed by the Taskforce.

Seeking clarity

Ireland operates as an open economy and Aviation is a vital component to sustaining access and international trade. The Aviation community is actively seeking clarity from the Government on precisely, when and how it is to resume operations and what financial supports, if any, might be forthcoming specific to this sector.

Recommendations

The Taskforce Report places particular emphasis on helping the industry rebuild services with less financial risk. It proposes 12 recommendations which fall into three categories:

  1. Protecting public health and rebuilding consumer confidence

  2. Rebuilding Regional and International Connectivity

  3. Saving jobs and Supporting Irish Business

Protecting public health and rebuilding consumer confidence

Most people will consider flying again when they have confidence that it is reasonably safe to do so. Measures needed or in the actions to restore such confidence make up the first 4 recommendations of the Taskforce.

  1. Green list – for the public, full transparency is needed on metrics and data being used to devise the list and for the aviation industry, advance notice and forewarning on the evolution of the Green List is proposed before release to public. Timely access to information about listing and delisting is needed for scheduling and cancellation arrangements as well as consumer compensation financial modelling.

  2. Travelwise - a single consistent, current and accurate source of all consumer and citizen advance is required and the obvious candidate is the DFAT “Travelwise” App. It should be widely promoted and available to the public and persons arriving into Ireland.

  3. Comprehensive test, track and trace – access to high quality, user friendly and medically sophisticated speedy test and results production, and contact track and trace.

  4. National Code – the National Code of Practice for Safe Air Travel should be in alignment with EASA. The European Centre for Disease Control (ECDC) protocols should now be finalised, adopted and implemented.

Rebuilding regional and international connectivity

The Taskforce outlined a set of 5 stimulus recommendations under the following headings:

  1. Dublin Airport – proposal for rebate to airlines of all Dublin Airport charges and air navigation charges.

  2. Cork, Shannon, Donegal, Ireland West and Kerry – stimulus package to include provision to the airports of a common fixed sum per passenger to be used by the airport to stimulate traffic. 5) & 6) represent State Aid and notice and approval from the European Commission would therefore be necessary.

  3. Slots – waiver for slot use-it or lose-it and reasonable notice period over any relinquishment of slots.

  4. Tourism taskforce - Aviation and tourism are inextricably linked. Taskforce urges the Government to adopt the interim recommendations from the Tourism Taskforce.

  5. Sustainable development – Government should enhance investment in the aviation sector in response to Covid-19 and the costs to support transition to carbon neutral operations. Airport infrastructure should have operational flexibility to meet market demands when required and the Government should provide funding for essential capital projects in line with European Commission rules on State Supports to Airports i.e. all airports with fewer than 3 million passengers are deemed eligible for capital expenditure support.

Saving jobs and supporting Irish business

The aviation sector supports upwards of 140,000 jobs. The Taskforce acknowledged that jobs have already been lost and more are at risk. The risk of bankruptcies casts a shadow on the industry and the sector needs State-backed access to financial supports at attractive commercial borrowing rates. The final 3 recommendations are:

  1. TWSS – retain until June 2021. Government has recently announced continuity of the TWSS scheme, albeit with modifications, to spring 2021.

  2. Liquidity supports – Government should enable a liquidity initiative for the aviation sector to help companies that make a material contribution to the Irish economy. Mirroring other European Governments supports should include guarantees, credit lines and underpins for interest rates. In the medium term, a Pandemic Recovery Initiative should help address sustainable developments in operations and physical infrastructure.

  3. Next gen EU – the Government should access ‘Next Generation EU’ €750 billion funds for Irish aviation sector. This is regarded as important due to our physical isolation from the EU continent and the risk of Brexit.

The Taskforce recognises that many of the recommendations have a cost. However some of the recommendations will benefit the entire economy and the health and confidence of the public. It makes a plea that the cost to stimulate aviation will see a return in the form of facilitation of international business development by multiple industries, who are faced with international competitors and challenges caused by Brexit. Finally in the longer term the Taskforce expressed a belief that a renewed National Aviation Policy (NAP) is appropriate in setting the national trajectory for the aviation sector for the current decade and urged the Government Ministers to initiate a process to consider a renewal of the NAP.

Comment

In conclusion, the Taskforce acknowledged the fundamental importance of the aviation sector for Ireland and called on the Government to commit to rebuilding.  What next? The report was delivered on 7 July to the Minister of Climate Action, Communication Networks and Transport, Mr Eamon Ryan and Minister for State with responsibility for International and Road Transport and Logistics, Ms Hildegarde Naughton. 

The Taskforce recommendations are clear and concise and the necessity to maintain the fundamental aviation infrastructure – airlines, airports and other key aviation commercial entities - is self-evident. What is needed from the Government is clarity on the meaning of “essential travel”, clarity on metrics associated with the “Green List”, enhanced investment in infrastructure to convey the required level of security and confidence to the travelling public and a package of financial measures specific to this sector to preserve the services and connectivity required to restore our economy and this industry.

For more information and guidance on the continuing impact of COVID-19 on your business, contact a member of our Aviation & International Asset Finance team. 


The content of this article is provided for information purposes only and does not constitute legal or other advice.

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