Paul Everitt, Chief Executive of ADS calls on the government to set out a plan that recognises the strategic role that the aerospace sector will play in the UK’s economic recovery.
The pandemic has had a severe impact on international air travel, and the tight restrictions now in operation will increase uncertainty for industry and consumers. Daily flights in the UK are now more than 80 per cent below their pre-crisis levels, and around 65 per cent lower across Europe.
Aerospace companies of all sizes across are anxiously watching the news and hoping they have done enough to sustain themselves until better times begin. Delayed deliveries to customers and production cuts by the major manufacturers made 2020 the worst year for global aircraft deliveries in more than 10 years. While the Job Retention Scheme has helped employers to protect their highly skilled workforces, we have seen 15,000 job losses directly attributable to the pandemic and its impact on the sector.
Direct, long-term capital support is essential to ensure the supply chain is financially able to invest in the capabilities for the future, such as the radical new green aircraft technology that will deliver the UK’s net zero ambitions.
Strict new measures such as hotel quarantine have severely dampened confidence across the aviation and aerospace sectors. Small and medium sized companies face particular challenges, with many unable to take on new burdens of debt to access the finance they need to survive the crisis.
The ongoing and impressive deployment of the COVID-19 vaccine in the UK provides hope that businesses can return to more normal operations this year. However, following the imposition of tough restrictions on travel, Government must act to support UK aviation and aerospace companies to avoid further substantial long-term economic damage.
To support manufacturers in our sectors the Government must use next month’s Budget to enhance support for hard-hit companies and set out an economic plan that recognises the strategic role they will play in the recovery.
Firstly, the strict travel restrictions we are now experiencing, including hotel quarantine and a ban on international travel except for a small list of exempt reasons, must be temporary. Airlines and other travel operators need clarity on when these restrictions can be lifted, and the time they are in place must be used to put in place a resilient system that can ensure passengers are free to travel without strict quarantine systems being required.
Aircraft are fitted with advanced HEPA air filters that clean and refresh the air inside cabins every three minutes, removing viruses and bacteria. Testing of passengers before and after travel, with results provided rapidly, offers the solution to restarting aviation while protecting the public, and ensuring airlines can continue flying despite changes in local infection rates.
Secondly, aerospace supply chain companies require long-term capital such as equity or long-term loans to recapitalise. The industry’s now highly leveraged supply chains will struggle to invest for the future. Direct, long-term capital support is essential to ensure the supply chain is financially able to invest in the capabilities for the future, such as the radical new green aircraft technology that will deliver the UK’s net zero ambitions. To protect the many highly competitive and innovative SMEs that our industry relies on, the Government must rapidly implement an Aviation and Aerospace Recovery Plan that offer both short-term financial relief and the longer-term financing that struggling companies need to safeguard their futures.
Finally, UK aerospace manufacturers are now focusing heavily on playing their part in realising the goals of the Prime Minister’s ten point plan for a green industrial revolution, and achieving net zero aviation by 2050. This challenge demands the full commitment of the public and private sectors, including substantial investment in researching and developing new technology and manufacturing capabilities.
The Covid-19 crisis threatens the ability of the sector to invest, and a strong statement of intent from Government to put resources into achieving its Jet Zero ambitions can help to position our industry as a world leader in zero carbon flight. The ATI’s current annual grant funding budget should be doubled to £330m per year through to 2030 and beyond, and Government should build on its current commitments to sustainable aviation fuels with a £100m per year investment that will enable the UK to become the commercial home and world-leader for this transformative technology.
The UK’s aerospace sector is a world leader in innovation and high value exports, it can play a crucial role in a strong national economic recovery. It is also one of the sectors worst hit by the current crisis, and specific support and investment is needed to build a bridge to a brighter and more prosperous future.
Paul Everitt is the CEO of ADS Group, the UK trade association representing 1100 companies in the Aerospace, Defence, Security and Space sectors