Air cargo services ‘perilously close to collapse’

The four main air cargo companies in the UK – Swissport, dnata, WFS and Menzies – have warned of the imminent collapse of their sector as a result of the COVID-19 pandemic. 

The stark warning, written directly to chancellor Rishi Sunak, said that such a collapse would severely impact the UK’s supply chain.

In the letter, all four parties request “urgent dialogue between the government and our industry”, regarding the support needed to ensure continued operational cashflow and secured employment for as many staff as possible.

The four businesses said that they provided 90% of cargo handling at all UK airports as well as essential services like security processing.

They stated that with 95% of flights not operating, ground handling companies are not being paid, adding that while the industry had welcomed the chancellor’s work retention package, the combination of low margins and staff comprising 70% of costs meant that the viability of the industry remained immediately unsustainable.

Jason Holt, chief executive of Swissport for Western Europe, said: “As an industry we strongly welcome the chancellor’s large-scale work retention package. Helping protect our employees and their jobs is a paramount concern of ours.

“However, even with this assistance, the aviation industry remains in crisis. And 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.

“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.”

The letter said that the ground handling industry would be working with HMRC to access funds committed by government but they were also calling for further support, specifically through:

• The relaxation of the eligibility requirements for either the Business Interruption Loans Facility or corporate finance loans offered by the government.
• A holiday from PAYE and National Insurance for both employees and employers, together with business rates relating to the significant number of premises they utilise.
• To respect social distancing and the furloughing of their teams, they are calling for a practical six-month extension to the Civil Aviation Authority’s regulations requiring all staff to receive retraining every two years.

“The aviation system is a triangle of airlines, airports, and ground handling businesses. Without cargo and ground handling companies, international supply chains will stop functioning during the COVID-19 pandemic and recovery,” said Holt.

“Our thousands of employees are keeping goods and parts moving safely and securely during the COVID-19 pandemic and will be integral to the recovery of airlines and airports once the initial crisis concludes.

“The ground handling industry is robust and competitive in normal times. We have chosen to come together as one voice in these extraordinary circumstances to ask that we be given the essential and urgent support we need to ensure planes can continue to fly.”

The letter was signed not just by Holt, but by John Henderson, senior vice-president for UK and Ireland at Menzies Aviation; Gary Morgan, UK chief executive at Dnata and Craig Smyth, chief executive at WFS.