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Loganair
The boss of the UK’s largest regional airline has said his firm plans to ask for government help to get through the coronavirus pandemic.
After Flybe’s collapse, Loganair is one of only two sizeable British airlines which run mostly domestic routes.
The pandemic has had a severe impact on airlines, its boss Jonathan Hinkles told the BBC.
He said that any airline saying it could survive without government help “would probably be lying”.
Mr Hinkles warned that the connectivity of remote Scottish islands and rural communities across the UK “cannot be maintained without air services”, arguing that government support for his airline was “essential”.
Loganair operates routes to the UK’s most remote airports such as Barra in the Outer Hebrides, where 19-seater planes land on the beach.
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In normal times, it runs regular services between small regional airports such as Exeter and Newcastle.
But the entire aviation sector has been hit hard by travel restrictions imposed to control the spread of coronavirus.
Loganair, however, is still running a higher proportion of its flights than other airlines because some travel to the most remote parts of the UK is still considered essential.
The airline is still ferrying people, mail and essential goods, such as pharmaceutical products, out to about 15 island airports.
Some of the most remote routes are subsidised by the Scottish government.
‘We have to fly’
Nevertheless, the Scottish carrier has had to ground half of its fleet and dramatically slash its flying schedule. This has put its entire operation in jeopardy.
“We can’t just shut down”, Mr Hinkles said. “Morally, we have to fly.”
However, without government intervention, Jonathan Hinkles warned that there would come a time when the airline simply doesn’t have enough income to cover its costs.
Loganair has not yet applied to HM Treasury for emergency support. Chancellor Rishi Sunak has instructed airlines to exhaust all other avenues before they make an official application.
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Virgin Atlantic has already indicated that it will also seek a bailout and airlines such as EasyJet are expected to follow suit.
Loganair’s planes are smaller and cheaper than bigger airlines, but it faces similar challenges.
Two-thirds of its planes are leased. Its French-Italian manufactured ATR-72s cost about £120,000 a month. Meanwhile, a Saab 340 is about £20,000 a month.
‘In the national interest’
Every airline is now negotiating with leasers, hoping that they will be granted more flexibility over payments.
Aside from the immediate problem of keeping the operation going, which Mr Hinkles believes is “in the national interest”, the longer-term problem is how quickly airlines like his can recover from the crisis – whenever travel restrictions are lifted.
He says that predictions within the industry about when airlines will fully recover are bleak.
“When a hairdresser is allowed to reopen, there will be a queue of people who need a hair cut,” he says. “That won’t be the case with aviation.”
So the boss of the UK’s largest regional airline will ask the government to cover losses, for a period of time, on vital routes, such as Southampton to Glasgow which is used by people working in the defence industry.
And like every other UK-based airline, his is calling for additional support measures from the government to weather the storm.
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The industry group Airlines UK and the Airport Operators Association have asked the government to cover air traffic control charges and payments to the Civil Aviation Authority until the end of this year.
Mr Hinkles says this amounts to a “significant element” of an airline’s cost base.
Airlines also want a six-month suspension of the Air Passenger Duty tax, which brings in £3bn every year to the Treasury.
The boss of Loganair said the impact of the pandemic on aviation had been “fast and severe” and that continued support would be needed once the height of the crisis has passed.
In the case of his regional airline, he warned that it would be “easier to support the infrastructure which is there, rather than to try and build that infrastructure” in the future.
A spokesperson for the Department for Transport said that the aviation sector is “important to the UK economy”.
They added: “We are willing to consider the situation of individual firms, so long as all other government schemes have been explored and all commercial options exhausted, including raising capital from existing investors.”