Club News

Aviation Club and NATS

Article courtesy BTNews: subscribe for free at BTNews: The Business Travel News

Last week saw NATS CEO Martin Rolfe as guest of honour at the first (virtual) Aviation Club lunch of the year.  He last spoke in 2016.

Aviation Club chairman Karl Brünjes (left) and Martin Rolfe. CEO NATS.Opening his address he cited the analytics company Cirium saying that the pandemic wiped out more than 20 years of global aviation growth, putting traffic levels back to where they were in 1999. Last year more than 40 airlines completely ceased or suspended operations.

He noted that closer to home Eurocontrol has just published a report totting up a total of more than €56bn of aviation losses across Europe in 2020, with 1.7bn fewer passengers contributing to plummeting load factors, as well as 6m fewer flights than in 2019.  By the end of the year 51% of European airframes were grounded and more than 190,000 people across Europe had lost their jobs in the industry.

Martin was emphatic.  “I need no crystal ball to know that it’s going to be a long haul to whatever a ‘new’ normal may look like”.

Two items stood out:  Remote tower operations, where he confirmed that London City Airport was expecting CAA approval this month, and the strange situation regarding the early destination arrival of scheduled aircraft.

“During lockdown we have had the bizarre experience of aircraft leaving their point of origin bang on time and racing to their destination in the hope of being first in the queue, and having to circle for 20 minutes burning precious fuel because they’re too early for their landing slot – or because the airport hasn’t even opened yet. We’ve already spoken with a number of airlines who have been staggered to learn of the fuel they could be saving, and adjusted their departure times accordingly.

Visit the Aviation Club “Speakers” website for a video of the speech.
https://aviationclub.org.uk

www.nats.aero

Aerospace Business in France post-Brexit

article courtesy of BTNews. Subscribe at www.btnews.co.uk

On Tuesday 8 December the Aviation Club of the UK hosted a Webinar on pursuing business in France in the aftermath of Brexit.  It is one of a series which the Club will continue into the new year.

David Priestley at UK Export Finance gave a government perspective.Karl Brünjes, Chairman, welcomed delegates and introduced the speakers.

Jean-Claude Bouche of JC15 Consulting who outlined the size and nature of the French aerospace market including consideration of the impact of Covid-19 and how priorities have changed over the last year.

Simon Phippard of Bird & Bird introduced the perspective of British aerospace companies. With the UK leaving the EU and not remaining within the European Union Aviation Safety Agency (EASA), UK businesses not only lose automatic access to EU markets, but many UK-issued aerospace licences and approvals are no longer valid on EU registered aircraft. While some businesses have an establishment in the EU or have transferred their licences to EU subsidiaries, many SMEs are not in that position.

Jean-Claude Vecchiato from Bird & Bird’s Paris aerospace practice explained that British companies no longer benefit from the provisions of the EU treaties such as freedom of establishment and of movement of goods and people. However establishing a business in France by, for instance, acquisition or joint venture, would mean that, in most circumstances, they do not have to be treated as “third country” businesses either for access to EU markets or for obtaining EASA approvals. Legally, supply contracts are not fundamentally affected but may need to be amended. Other issues which companies need to consider are the recognition of choice of law and enforcement of judgments.

Corporate partner Anne-Cécile Hansson explained how branches of UK companies will be treated as branches of “third country” companies, which may require notification of additional information. French law imposes restrictions on controls on foreign investment in certain sectors including some defence activities. However in principle there is no restriction on a UK company setting up a French subsidiary.

Laurence Clot, head of Bird & Bird’s tax practice in Paris, noted that double tax treaty provisions between France and the UK will protect taxpayers from most of the impact of Brexit. This is true of tax treatment of interest, royalties and branch taxes but there may be withholding tax implications in relation to dividends. On the other hand, if the UK changes some tax rates such that it is regarded as a tax haven, France may apply anti-abuse provisions. As is well known, VAT and customs duties will be handled very differently on imports and exports between the UK and France.

David Priestley Head of Export Finance Managers and Business Group Operations at UK Export Finance, and formerly with Rolls-Royce gave the Government’s view.  This is the operating title of the Export Credits Guarantee Department, the United Kingdom’s export credit agency and a ministerial department of the UK Government.  He explained how the assistance can be obtained providing guarantees, letters of credit, loans and credit insurance to assist businesses in securing, fulfilling and getting paid for orders.

www.gov.uk/government/organisations/uk-export-finance

www.twobirds.com

Cargolux, Covid and Conversions at the Aviation Club

Richard Forson, President and CEO Cargolux Airlines addressed Club Members and Guests during a webinar session on Thursday 12 November 2020

The following article is taken from BTNews and can be found at https://www.btnews.co.uk/article/16889

Other reports include:

Choice Aviation Services: https://choice.aero/cargolux-looking-very-closely-at-777-300er-freighter-conversion/

Simple Flying: https://simpleflying.com/boeing-777-300er-freighter-conversion-gains-interest-from-cargolux/le

IATA News: https://www.iatanews.com/2020/11/15/boeing-777-300er-freighter-conversion-gains-interest-from-cargolux/

Airliner Watch: https://www.airlinerwatch.com/2020/11/cargolux-eyes-777-300er-freighter.html

https://newsakmi.com/travel-news/boeing-777-300er-freighter-conversion-gains-interest-from-cargolux/

FlightGlobal: https://ftp.hotelnewsresource.com/cargolux-looking-very-closely-at-777-300er-freighter-conversion-1939.html

TravelUni: https://traveluni.com/business-travel-hub/

Bloomberg News: https://www.bnnbloomberg.ca/passenger-jets-can-play-integral-role-in-frozen-vaccine-airlift-1.1521580

N-Business: https://www.thenationalnews.com/business/aviation/parked-passenger-planes-can-help-to-get-pfizer-s-covid-19-vaccine-off-the-ground-1.11104

Richard Forson, President and CEO, Cargolux Airlines, proved to be an informative and entertaining speaker for an Aviation Club of the United Kingdom (virtual) lunch last week.  At 50 minutes it proved to be the longest ever speech to the Club and one of the best.

Richard Forson delivered a strong and informative speech.2021 marks the 50th anniversary of Cargolux, Richard joining in 2012 and now has close to 30 years’ experience in the aviation industry and an extensive background in finance, general business and operational management.  He told viewers that it was boom time for the airline after a dreadful first two months of the year.  “We are working flat out, recruiting pilots and ground staff, but Covid-19 brings its own problems.  We are even more safety conscious.”

Cargolux is examining the Boeing 777-300ER freighter conversion programme as a candidate to meet its future fleet requirements, Mr Forson said.

When production of the 747 ceases in 2022, “a significant capability will be lost to the logistics market,” he conceded. “I don’t ever see another four-engined freighter being developed by any manufacturer.”

Cargolux’s current fleet features 14 747-8Fs and 16 747-400s.

www.cargolux.com

Wizz Air CEO Expects Smaller Airline Industry After Pandemic

LONDON (Reuters) CLICK HERE FOR ARTICLE LINK-

To view Webinar session CLICK HERE

The world will have a smaller airline industry as a result of the coronavirus crisis with many privately funded carriers set to go under and governments throwing “good money after bad” to keep national champions afloat, Wizz Air’s CEO said.

Worst hit will be traditional carriers relying on a hub-and-spoke network and business traffic, but Wizz expects demand for its own cheap fares and direct routes to snap back quickly once the pandemic fades, the Hungarian airline’s co-founder said.

Wizz aims to widen a gap in unit costs compared to the rest of the airline industry thanks to regular deliveries of new Airbus AIR.PA aircraft, Chief Executive Jozsef Varadi added.

Co-founded in 2003 by Varadi, a former head of Hungary’s defunct national carrier Malev, Wizz Air is one of Europe’s largest budget carriers with a focus primarily on central and eastern parts of the continent.

Speaking in a webinar hosted by the UK-based Aviation Club, he bemoaned a lack of political coordination over travel restrictions and other measures to tackle the crisis and urged policymakers to pay more attention to the economic impact.

Dozens of countries worldwide, including France and Germany, have given various forms of public support or taken increased government stakes in their flag carriers to help them survive the crisis, which has sharply reduced travel demand.

But the industry has also faced a tangle of inconsistent travel and quarantine rules which airlines partially blame for putting people off taking the reduced number of flights.

“As far as Wizz is concerned, the moment COVID falls away I think we will be back to 2019 levels,” Varadi said.

“We can go very quickly, but the issue is not underlying consumer demand; the issue is restrictions imposed by governments.”

Wizz is operating on half normal traffic now, he said.

While aircraft deliveries are down sharply as airlines struggle to preserve cash, Wizz Air has continued to add to its Airbus fleet during the crisis. Together with India’s IndiGo INGL.NS it makes up about a quarter of Airbus deliveries.

Finance remains available for the small number of airlines like Wizz that have investment-grade status, Varadi said.

He also said Wizz was open to other foreign ventures after forming a startup in Abu Dhabi and expanding in the UK, where it would continue to invest after Brexit.

Wizz Air Abu Dhabi, a joint venture between the Hungarian budget airline and Abu Dhabi state holding company ADQ, has received an air operator certificate, though its launch has been hampered by a coronavirus ban on foreign visitors. [nL8N2H80C8]

Reporting by Tim Hepher; Editing by Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

Aviation Club Webinar on 20 October 2020 with Wizz Air

News from BTNews – www.btnews.co.uk

Tomorrow Tuesday (20 October) will see József Váradi, founder and CEO of Wizz Air live via Zoom at a virtual Aviation Club lunch 12:00 noon (BST).  There is no charge for members and their guests.

József Váradi, founder and CEO Wizz AirWizz Air was born in 2003 competing with the state-owned Malev Hungarian Airlines which finally collapsed in 2012.  Váradi, whose education included a spell at the University of London for a law degree, was for ten years with Proctor and Gamble rising to Sales Director for Central and Eastern Europe.  

In February 2015 Wizz Air Holdings Plc started trading on the London Stock Exchange (LSE) and in 2018 created Wizz Air UK with UK-registered aircraft and a British Managing Director.  It has in recent times joined Airlines UK.

Wizz Air currently has a fleet of 132 Airbus 320 series aircraft and Mr Váradi will bring us up to date on the current trading situation bearing in mind LSE regulations.  In 2019 Wizz Air transported 41.7m passengers.  He is expected to discuss Wizz Air Abu Dhabi now scheduled to launch 15 November.  

Chairman Karl Bruges will introduce Mr Váradi but he will accept questions after his discourse.  

Registrations close midday today (Monday 19 October).

For readers tuning in to the talk here is the airlines November UK programme.

https://wizzair.comhttps://aviationclub.org.uk

Update from Tim Alderslade, CEO Airlines UK

Airlines UK is the trade body for UK registered airlines, with members representing all sectors of the industry.  Working with governments, regulators and legislators they promote the interests of UK airlines to encourage long-term and sustainable growth in aviation.  They help to formulate opinions and engage with stakeholders on a number of issues, including airport capacity, taxation, sustainable aviation, disruptive passengers and regulation and consumer protection. 

Many of you will know Club Member Tim Alderslade, CEO Airlines UK, who frequently attends Club events.  Tim has sent the following review for fellow Club members.  We very much appreciate this personal insight and look forward to seeing him and his team at Club events again soon.  

“Halfway through the year, June would typically represent the start of the all-important summer season for our airlines with families setting off on their holidays and students planning out their travel plans between terms. The reality, however, with the impact of the COVID-19 crisis, is footfall at UK airports is down to 97% of normal passenger levels, airlines have been forced to ground operations and we’ve witnessed the temporary closure of a major London airport.
 
We are under no illusion about the impact of the crisis, and the unprecedented challenges it has meant for the industry. It is by far and away the worst disaster to impact UK aviation in our long history. Despite this, we also have so many reasons to be proud of the response and the actions industry has taken. From upscaling freight capabilities for delivering vital PPE equipment from around the world, repatriating hundreds of thousands of British nationals, and airline staff volunteering to support NHS workers at Nightingale hospitals across the country. This truly has been a time for pride in our sector.
 
Amidst these successes, our biggest challenge to recovery, however, remains the need to move beyond the current travel and border restrictions as well as quarantine as soon and safely as possible. Here we have already seen industry and Government coming together to produce some incredible work on aviation health guidance at breakneck speed, demonstrating what can be possible through collaboration. This will help to give passengers the reassurance they need that air travel remains safe.  
 
It is continued partnership with Government on aviation’s restart & recovery which will be key to ensuring airlines can return back to operations in the most sustainable way possible. As air bridges are introduced on 6 July – following a determined campaign by the whole sector that the economically ruinous quarantine policy should be removed – there does need to be recognition that the recovery of operations will take time, which is why we are asking for support measures including a 12-month suspension of APD, as other European countries have done.
 
Passengers from the UK, be they holidaymakers to Spain or those on business trips to China, pay by far the highest aviation tax in Europe – twice that of Germany.  For a family travelling long-haul, this can add hundreds of pounds to the cost of the ticket.

An emergency suspension of the tax for 12 months – alongside a clear signal of support for the ending of the double taxation for UK domestic travel – would be a game changer, boosting demand, allowing airlines to maintain and build back connectivity, and protecting jobs in the process. With the skies so empty, the cost to the Treasury would also be hugely minimised. Countries like Norway, recognising the danger, have already acted in this way.   

As connectivity picks up and airlines restart operations, our focus will once again return to priority themes including sustainability. Indeed, it was only in February this year that our industry came together as airlines, airports and manufacturers to make a commitment to reaching net zero carbon emissions by 2050 – the only such industry commitment from any country in the world and one that – even with Covid – we continue to fully support. Despite these challenging times we have already seen positive announcements even this past month on green recovery ambitions with the planning approval of the UK’s only sustainable jet fuel plant in Immingham. This joint project between Veloycs, Shell & British Airways will see household and commercial waste converted into jet fuel – an announcement that represents the potential for the UK to lead worldwide on this technology.
 
To summarise, it is no mistake to say the impact of the Covid crisis will, in the long term, be the most important and deep rooted the industry has faced. That said, the sector has demonstrated a remarkable record of bouncing back in the face of adversity – whether following the 2008 economic crisis or the fallout from 9/11 – and I have no doubt this this will also be the case now. We have much to be positive about, whether in the ground made on sustainability ambitions or the clear demonstration of resilience the sector has shown.
 
With strong ambition and leadership from Government, I am certain that UK industry can continue to celebrate its position as one of the largest and most successful aviation markets in the world.”

Insight from Robert Sinclair, CEO London City Airport

Aviation Club Op-ed

Our industry has faced significant challenges over many decades, but never could I imagine a situation where virtually all flights around the world would be grounded for months on end.  This crisis is having a huge impact on our industry and businesses and economies across the globe.  We can only hope that governments will realise very shortly just how isolated and impoverished the world would be without air travel.    

At LCY, we made the decision to temporarily suspend operations in late March just after the lockdown was announced by Government and when we could see a real increase in infection rates across London. It certainly was not an easy decision, but we felt it was the right thing to do for the health & wellbeing of our staff and passengers, and to protect the local community in Newham.  This period has also allowed us to efficiently progress a number of airside projects as part of our major development programme.

The weeks since lockdown began in the UK have been like no other, and while there have been barely any aircraft in the sky, the demands placed on staff as we completely re-write the rules of air travel, and re-interpret the guidance in our airports and on-board planes, has meant we have all been working as hard as ever.

For us at London City, the challenges we have went through will be worth it on June 21st when we restart services. It is something everyone is looking forward to and news which staff, as well as many of our stakeholders, have welcomed.

We anticipate a relatively slow build up as the market returns, and as passengers become more confident with the new health measures in place, and hopefully the new quarantine is lifted, partially or in full.

During this period, we have worked very closely with our airlines, concessionaires and other business partners to support their re-start plans, with all of us focussing on working together and taking a long-term, “one team” approach at LCY.

We are confident that by the start of July we will have more domestic services from the airport, including Dundee and Teeside which were announced pre lockdown but were yet to commence from the airport. We also expect to see our biggest airline, BA City Flyer, once again providing business and tourism connectivity across the UK and Europe and they will hopefully be joined by KLM and LuxAir.

As airlines look to make decisions about the future, it is my hope that some who do not currently operate from our airport, consider the economic advantages of flying regional and hub services on smaller, LCY approved aircraft. We also hope they will consider the more traditional benefits of the airport, which I believe are even more relevant in the world we are in  now, such as the fact we remain the quickest airport to get to and through from Central London and that we will not require passengers to be in the airport 2 hours before departure. We are certainly looking forward to having those conversations and working with them on an offer that will appeal to passengers as they start to make their travel choices again.

However, the 14 day quarantine ban has undoubtedly hampered and delayed the recovery of UK aviation and everything it delivers for the economy.

You all know the arguments against it, indeed I am sure many of you have made them publicly yourselves. What is important now is that we help the Government make sensible, not reactionary, policy which helps the industry, the economy and allows people the ability to explore the world again.

We urgently need to understand when it will be reviewed, who it will be reviewed by, what data will be considered and how this will be communicated to industry and passengers.

What we cannot have are any more surprises. There needs to be genuine collaboration between Government decision makers, industry and international partners to gradually remove the quarantine, first with air bridges at the end of June, and then, hopefully altogether by the end of July at the latest so we can get the economy moving by facilitating business, and in and outbound tourism.

Your data, your insight, whether it is on demand, country by country epidemiological data, or risks you face will be invaluable and I would encourage you to share them with Government as soon as possible.

Passenger confidence will completely underpin how we bounce back. I hope over the next few weeks, as UK consumers see Europeans taking to the sky again, and as Government health guidance for travel is approved, we will be able to communicate with passengers about why they can feel confident about booking flights again.

That is exactly what London City Airport will be doing in the build up to June 21st. All of our communications will be underpinned by a focus on health and safety, and passengers knowing that we have their wellbeing at heart.

The airport will follow government guidance to the letter and  will go above and beyond it in some instances, for example by installing Temperature Checking Technology both on departure and arrival, providing staff with face masks and visors and providing clear instructional signage for every step of the journey. The airport will also deploy rigorous and thorough cleaning regiments, including the use of an anti-bacterial surface treatment which will begin to kill all germs upon contact and lasts for up to 12 months. 

We believe this is what passengers want. And, moving forward, we will stay in conversation with our customers so we consistently improve, adjust and make safer, the experience travelling through the airport.

But we should not underestimate the challenges ahead. Every single aspect of the passenger journey from origin to destination will change. And if all parties are not aligned that will undermine not only passenger confidence but confidence from government in our ability to withstand a similar crisis in the future and avoid another global shutdown. This is the greatest risk to us all and one that we must collaborate on to avoid.

Aviation has seldom had it easy. Our gains have been hard won and we will have to regroup to ensure we can grow again in a market where much more is expected of us in terms of health & safety, sustainability and being responsible employers.

But if ever you have doubt, just remind yourself how integral we are to how this island does business, for tourism and for simply enjoying a well-deserved holiday abroad. We are integral to the human experience and that, no matter how aggressively it is marketed, will never be possible by Zoom!

Trying to gain some perspectives on a more likely future

The second in the series of papers supplied by Chris Tarry at CTAIRA – Trying to gain some perspectives on a more likely future’ is now available.

Many of you found the previous survey of great interest.  Surveys are not only interesting but also important in informing both perspectives and subsequent actions. The results have a wide range of applications from “front running” and testing potential policies, or responses, as well as enabling a view to be taken on what might now be considered to be both necessary and acceptable for the restart and recovery of a number of sectors.

Whilst it is not possible to apply the results of these surveys into quantifiable outcomes, they are useful in providing a view of what might be considered to be important in a particular environment or set of circumstances.  The full paper can be read HERE.  

The CTAIRA Passenger Confidence Survey

Long term Club Member, Chris Tarry, established CTAIRA in December 2002 to provide research consulting services and advice on and to the transport and aviation industries in the areas of business planning, including strategy and strategic development; industry and market forecasting ad performance measurement and evaluation.  His services are provided to a broad and still growing spectrum of clients drawn from airlines, manufacturing companies, airport owners, government bodies, banks and other financial institutions.  Chris has also acted as advisor to government departments, regulators and the UK Parliament on aviation issues and has also been, a member of a number of industry panels and advisory councils. 

Chris has generously provided a number of topical papers for circulation to members, the first of which – The CTAIRA Passenger Confidence Survey, is a survey which has drilled deep to understand which activities or requirements would be considered sufficient to give confidence to fly again once any restrictions are lifted, in a bid to answer how traveller confidence can be restored.  The Survey report can be read HERE.  

Update from John Holland-Kaye, CEO Heathrow Airport

Unfortunately, our events programme remains suspended and last week we missed the April lunch, where we would have been joined by guest speaker John Holland-Kaye, CEO Heathrow Airport.  I know many of you were particularly looking forward to hearing from John and rest-assured, he will join us at a future date.

Stock markets have collapsed, businesses have had to close and public life is restricted due to the Covid-19 virus.  It’s a humanitarian crisis and there are drastic global restrictions in place to minimise the spread.  They may vary from continent to continent, but one thing they have caused already:  A large part of commercial air traffic has come to a standstill.  Travel bans and plummeting demand have darkened the future of the aviation industry.  Never before has it been hit by an incident of this magnitude, resulting in almost no passenger business.

Whilst John was unable to address Club members and guests last week, he has provided an insight into the current situation, which you can read below:

‘Prior to this outbreak, our sector thrived. Many of us had enjoyed record breaking years.  Airlines prepared to launch new routes to untapped markets, that would take British goods to more parts of the world and bring back tourists and inward investment to our beautiful isles. Many airports were progressing growth plans, be it in existing terminal buildings, emergency runways or building new ones.

This feels like a lifetime away, yet it was only a few months. It was only twelve weeks ago our industry felt the first warning ripples of the initial outbreak in China and we started working with health officials on enhanced monitoring measures. As the outbreak became a pandemic, travel bans and lock downs became the norm, crippling trade and tourism and mothballing planes and terminals.

While some commentators have questioned why airports remain open, there has been increasing realisation of the crucial role aviation plays in the fight against Covid-19.

I often talk about the critical economic role Heathrow plays as the UK’s biggest port.  Today, many of us are working around the clock to keep vital supply lines open, as ventilators and precious PPE equipment land at airports across the country supporting the battle against this pandemic.  If we were not open, tens of thousands of British citizens would be stranded across the world without the support of friends and family or even access to medical help.  So let us pay tribute to the hard working men and women of the aviation industry who have worked so hard on the front line to support the NHS and bring people home. 

But even as we serve the nation, the aviation sector is facing real financial distress.  Our revenues have disappeared, but our costs remain largely fixed. This is an existential threat to our supply chain, as well as all those who rely on aviation for their livelihoods. We will publicly support any business in our sector that needs Government help.  It is vital that we emerge from this crisis with a vibrant and competitive aviation industry.
The government can do more to help.  We have been pushing for deferral of Business Rates, which represent over 10% of our costs, and currently more than our revenues.  Only in Scotland has the government waived unaffordable rates to support aviation.  Now we need a level playing field.

Whilst we are consumed by this crisis, it is important that we think about how we can accelerate the recovery, and the critical issue will be the reopening of borders to international travellers, without the need for quarantine. The crisis came on so rapidly that each country set its own health screening standards, with little coordination.  Rightly or wrongly, those that require temperature checks, are perceived as being safer than others, such as the UK. 
 
As we come out of this crisis, each country will be cautious about reopening their borders to avoid the risk of reinfection.  Until there is a cure or a vaccination, it is likely that travel between countries will only happen if each considers the other to be low risk, and to have similar high standards.  So the aviation industry needs a common biosecurity standard for air travel, just as there is for airport security. 
 
And the UK needs to be at forefront of this.  We are an island nation and a trading nation, which is why we have one of the biggest aviation sectors in the world.  Millions of jobs in tourism, education, retail and exports rely on aviation.  Unless we can make it safe for people to visit Britain, the UK economy will be held back.  Let’s work together with the international aviation sector and governments to define and agree a common biosecurity standard. 
 
Leaving the middle seat empty on planes cannot be a long term solution.  It would take out a third of the world’s aviation capacity, drive up the cost of travel for marginal safety improvement and increase every passenger’s carbon footprint.   
 
Maybe it is better that, as with airport security, the test for whether someone is safe to fly should take place at the entrance to the airport or at airport security, so that we can minimise the need for social distancing on the plane or at the gate.  If there is a common international standard, we will know that any arriving passenger will be low risk and we can minimise the need social distancing in immigration or baggage reclaim also.  We have made good progress on automating the passenger journey, but the final steps have been held up by bureaucracy.  Now is the time to push ahead so that we minimise contact between aviation workers and passengers in check in, bag drop, security, boarding and immigration. 
 
If we can get this right, we will be more resilient to deal with any future pandemic.  And the aviation sector and all the industries that rely on us, can fly high into the future.’  John Holland-Kaye, CEO Heathrow Airport

#StaySafe