UK air freight on the brink of collapse

Like their American cousins , business leaders from U.K. cargo companies are warning their government that the aviation industry is on the brink of collapse and urging it to take significant action in support of the industry. They are seeking an extension of the Brexit transition, in addition to further financial and regulatory support. The British International Freight Association ( BIFA ) and four of the U.K.’s leading ground handling companies — Swissport , dnata , Worldwide Freight Services ( WFS ) and Menzies Aviation — said these measures will help avoid a grinding halt to the sector, which they argue would severely impact the U.K.’s supply chain during the ongoing crisis. According to BIFA, in light of the massive disruption to supply chains being caused by the coronavirus crisis, it would be irresponsible for the U.K. government to try to abide by the timetable for ending its Brexit transition period. “The government is still insisting it will not request an extension, saying the Dec. 31 deadline is enshrined in law, but whilst Boris Johnson might insist that Brexit is done, we know from our regular meeting with government departments that there is a huge amount left in the civil service’s EU exit in-trays, and everybody is completely overwhelmed with the crisis,” said Robert Keen, BIFA director general. “I understand that requesting an extension would be very difficult politically for the government,” he added. “Given the prime minister’s insistence that the Brexit process would not be delayed further, but true statesman act in a statesman-like manner in times of global crisis, which is where we are now.” BIFA said its members have been “knocked sideways by the virus” and will not be well-placed to adapt to a second shock if there is significant change in terms of trade with the E.U. at the end of the year. “This is not an argument about leaving the EU — that is done and dusted,” Keen said. “This is an argument about managing the transition process when not just the goalposts, but the entire playing field has moved.” British ground handlers Swissport, dnata, WFS and Menzies Aviation also implored the U.K. government to take greater action in the crisis period, saying that while they welcomed the U.K. chancellor’s work-retention package announced earlier this week, the industry remains unsustainable due to low margins. The ground handling industry provides 90% of cargo and passenger handling at all U.K. airports in addition to essential services, like handling and security processing of cargo and aircraft fueling, the ground handlers said in a joint statement. However, because of the massive number of cancelled passenger flights, ground handling companies said they are not being paid. In fact, Menzies has already laid off 17,500 of its employees globally due to unprecedented fall in demand, according to a press update issued this morning. Its directors and senior management have also taken a 20% cut in salary as part of the company’s cost-reduction initiatives, and said they hoped a high number of jobs would be recovered. The drastic hits to the industry demonstrate greater need for government aid, without which the ground handlers believe business will collapse. And without their services the companies argue U.K. airports and aviation as a whole cannot function, resulting in the deterioration of supply chains to the U.K. in this time of crisis. “Without immediate support with taxation and charges, operational flexibility, and the flow through of the chancellor’s announcement from last week into actual cash funding to support our workforce, we are perilously close to collapse,” said Jason Holt, CEO of Swissport for Western Europe. “In light of the chancellor’s recent letter to the sector, I have profound doubts that the fundamental challenges for the industry, both now and in the future, are being addressed.” The ground handling services companies said they are working with Her Majesty’s Revenue and Customs (HMRC) to access funds already committed by the government, but are calling for more support, including: The relaxation of the eligibility requirements for either the Business Interruption Loans Facility or corporate finance loans offered by the government; A holiday from the pay as you earn (PAYE) system and national insurance for both employees and employers, together with business rates relating to the significant number of premises they utilize; and A six-month extension to the Civil Aviation Authority’s regulations requiring all staff to receive retraining every two years, in order to respect social distancing and the furloughing of their teams. The current air cargo situation in the U.K. constitutes a major shift from the considerable expansions stakeholders in British cargo operations have made over the past year .

UK air freight on the brink of collapse

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