Ian Defty, insolvency expert at CVR Global, believes easyJet’s decision to ground all of its flights amid reports of Virgin Atlantic allegedly seeking government support, strengthens calls for the Airline Insolvency Review to be broadened out.
He said: “The ramifications of Covid-19 are starting to emerge in the air line industry, strengthening the argument for the government to revisit the Airline Insolvency Review so that it also covers the business themselves, and not just consumers.
“There are numerous reports that Virgin Atlantic are allegedly seeking a government bailout, while easyJet have now grounded all of their flights for the foreseeable future, adding to other turmoil surrounding Flybe, Thomas Cook and Monarch – so now is the time to review how the industry as a whole can weather this storm.
“The government’s recent round of Covid-19 financial packages – particularly furloughing, business interruption loans and relaxed insolvency laws – will help to bide some time until the Coronavirus crisis recedes and a way forward for airlines can be reviewed.
“I think we are going to see fewer airlines operating, less frequently, on routes moving forward – particularly where professionals are waking up to the efficiency and cost-effectiveness of video technology – and there needs to be a more collaborative approach whereby airlines are sharing routes.
“Before implementing parts of the Airline Insolvency Review there needs to be a recommendation to form further airline amalgamations similar to that of the Oneworld and Star Alliance – which are made up of international airlines that work together on sharing routes and profits on long-haul flights.
“A situation whereby Ryanair, easyJet, British Airways and holiday companies are all competing principally on the same or similar flights is not necessarily the way forward for a sustainable airline industry, meaning that some airlines may have to explore alternative routes for a more viable future.”