Reed Smith Client Alerts

The aeronautical industry is one of the sectors that has been the hardest hit by the COVID-19 crisis. Confinement orders in many countries around the world as well as closing of borders has led to the cancellation of almost all international and national passenger flights globally.

Authors: Victoria Westcott Florent Rigaud

Airplane flying in the sky

The post COVID-19 situation is already looking disastrous for the aeronautical sector as many small airlines which have sprung up over the last decade will not survive the crisis and even the larger, more solid airlines will be forced to rethink their business models.

Without rapid and radical intervention by governments even the biggest “flag carrier” airlines will struggle to deal with this global crisis which is affecting the whole of the tourism industry.

In France, the government has just announced a deferral to the 2021 and 2022 of the payment of air navigation charges (collected by Eurocontrol on behalf of France) as well as the Civil Aviation Tax and the Solidarity Tax, both of which are taxes on ticket sales normally payable in March and December 2019. These measures aim to provide some much needed relief to the French airlines. They are not available to foreign airlines operating in France. Nonetheless, the French airline market was already showing signs of weakness prior to the pandemic with the bankruptcy of two long-standing French airlines, Aigle Azur and XL Airways, at the end of 2019. It therefore seems inevitable that the Government will need to take further measures rapidly to protect its airline industry.