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Coronavirus: Over 100 MPs call for long-term furlough scheme for aviation sector

Edmund Heaphy
·Finance and news reporter
·3-min read
A plane leaves Newcastle Airport tonight as travellers stranded abroad by the volcanic ash cloud returned to the UK in a trickle rather than a flood as recriminations flew about the Government's handling of the crisis.
The open letter comes as the aviation sector continues to confront an unprecedented crisis in coronavirus. Photo: PA

Over 100 MPs on Friday joined forces with trade union Unite to call for a long-term extension of the UK government’s wage subsidy scheme for the country’s aviation sector.

In an open letter to chancellor Rishi Sunak, the MPs said that the move would provide “much-needed stability” to the sector, warning that there was otherwise “no realistic prospect” for a quick return to normal for the industry.

The scheme, which has seen as many as 9.4 million UK workers placed on furlough during the coronavirus pandemic, is currently set to be wound down at the end of October.

The open letter comes as the aviation sector continues to confront an unprecedented crisis in coronavirus.

British Airways-owner IAG (IAG.L), EasyJet (EZJ.L), and Virgin Atlantic are among airlines that have announced tens of thousands of job cuts, while the country’s airports have swung to historic losses.

READ MORE: London Gatwick sinks to £321m loss as Schipol airport cuts hundreds of jobs

On Friday, London’s Gatwick Airport reported a loss of £321m ($420m) for the six months to June, largely due to a 66% fall-off in passenger numbers.

The news came after the airport on Wednesday said it needed to trim 600 jobs — or around a quarter of its workforce — so that it could reduce costs in the wake of weaker demand.

The sector has been particularly impacted by the country’s travel corridors system, which requires travellers from most countries to quarantine for 14 days upon arriving in the UK.

While acknowledging that the job retention scheme has provided “an essential safety net for workers and businesses,” the letter asks the government to consider the merits of a specific long-term extension for the aviation sector.

The scheme could then be tied to the phased unlocking of restrictions, such as the easing of quarantine measures, the letter advises.

The MPs said that the scheme should be extended until March 2021, with a review taking place in November 2020.

READ MORE: UK government 'frightening' women in row over back-to-work threats

Workers furloughed on the scheme should continue to receive 80% of their pay, the letter says.

Under current plans, the government will contribute just 70% of a worker’s salary as part of the scheme from September. This will fall to 60% in October as the scheme is wound down.

Employers must nevertheless top this wage subsidy up to ensure that furloughed employees still receive 80% of their wages up to the £2,500 limit.

“This proposal has the backing of business, airports, trade unions and cross-party politicians alike who recognise that this would provide some much-needed stability to the industry and would be a vital lifeline to aviation workers across the country,” the letter says.

The letter has been signed by Conservative MP Henry Smith, who represents the constituency where Gatwick Airport is located, Labour’s transport spokesperson Jim McMahon, Labour deputy leader Angela Rayner, another 10 members of the shadow cabinet.