State aid for airlines is a vexed issue. Aid, in any form, runs counter to most mainstream economic theories. But state aid is a fact of life and even more so in 2020. As this year unravels, many airlines are relying on state aid to keep flying. Recent work by aviation analytical group OAG threw up some fascinating numbers regarding state aid for airlines.
Singapore Airlines standout beneficiary from state aid
In an OAG webinar last week, Strapped For Cash: How Airlines Can Survive Winter, airline analyst John Grant discussed the amount of state aid some airlines got this year.
Leading the pack was Singapore Airlines. That state-owned airline received a massive US$13 billion bailout earlier this year. Singapore Airlines was more disadvantaged by the travel downturn than most airlines. It solely flies international routes and has no domestic network to fall back on. But it also has the advantage of being backed by a rich country.
“In some parts of the world, governments do not have the cash to support their airlines. If you look in Latin America, in times of a pandemic, there are much bigger issues than purely refinancing or protecting your airlines,” said Mr Grant.
From January to August, Singapore Airlines had 6,613,702 seats available. It received US$1,315 in state aid per seat flown. Notwithstanding this largesse, John Grant says the Singapore Airlines example should not be seen purely as a bailout.
“It’s a more complex refinancing structure in Singapore than a loan.