This Government Is Damaging The Aviation Industry

Chancellor Philip Hammond said this week that a "no deal" Brexit could suspend flights between Britain and the EU. His comments reflect the genuine uncertainty faced by an industry which will soon start selling flight tickets for April 2019. The Government and many on the Tory backbenches are in denial about how much they are harming the aviation sector. Conservative policies are damaging UK business.
Darren Staples / Reuters

Chancellor Philip Hammond said this week that a "no deal" Brexit could suspend flights between Britain and the EU. His comments reflect the genuine uncertainty faced by an industry which will soon start selling flight tickets for April 2019. The Government and many on the Tory backbenches are in denial about how much they are harming the aviation sector. Conservative policies are damaging UK business.

This lack of post-Brexit clarity, as well as fierce competitive challenges in the market, were the final straw for Britain's fifth largest airline, Monarch, which went into administration earlier this month. The airline collapsed because of a litany of failures by the Government, the regulator and the company's financial backers and advisers.

Monarch's bankruptcy has left huge losses on the shoulders of the public, rather than of the parent company. It is the staff, customers, the taxpayer and pensioners who will pay the price, including the £60 million paid by the Government to repatriate holidaymakers, £26 million paid last year when Monarch previously came close to collapse, £7.5 million to the Pension Protection Fund, the 45 days' pay owed to the 2,000 staff who were made redundant, and refunds for the 750,000 outstanding bookings at the time of the collapse.

The Government could have done more to support Monarch and ensure that the company was viable even for the short term. The airline had money in the bank and should have been allowed to carry on at least long enough to bring its passengers back.

Taxpayers now face a bill of more than £100 million while Monarch's parent company Greybull has shielded itself from losses and, scandalously, may even make a profit.

Frustratingly there is an estimated £200 million in the ATOL compensation fund, yet it only covers about one in 20 of Monarch's customers. The fact that the public purse is incurring such huge costs while the ATOL pot sits largely untouched demonstrates the need for the Government to ensure that changes are made to afford financial protections to passengers and taxpayers in future.

Greybull Capital's takeover of Monarch in 2014 was the beginning of the end for the airline. Greybull is a private investment firm that has already presided over the collapse of My Local convenience stores and Comet, among others. Serious questions must now be asked about the conduct of firms such as Greybull and their investment practices.

In addition, it has emerged that aerospace giant Boeing was involved behind the scenes in Monarch, including a cut-price deal for new aircraft and providing a £165 million rescue package.

The Prime Minister recently criticised the conduct of Boeing against Bombardier in Belfast, in support of her Democratic Unionist party allies. Yet the government is silent on the company's role in the loss of 2,000 jobs in Luton.

There is something deeply wrong if Monarch can put itself into administration while the parent company protects itself from losses through a complex web of offshore companies, and the debts are left on the shoulders of the staff, customers, the taxpayer and pensioners. The Government must instigate a full investigation into the circumstances which led to the administration.

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