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Australian aviation sector on the cusp of collapse

CRITICAL but forgotten parts of the aviation industry are seeking a $125 million lifeline from the Australian Government to ensure the safety and security of all Australians can be maintained once travel restrictions are lifted after COVID-19.

Aviation ground operations play a critical role in protecting Australians from terrorists, illegal narcotics and organised crime, and in sustaining the $69 billion air transport industry, that directly and indirectly supports 716,000 jobs.

Without ground operations staff, airlines cannot fly.

While the Australian Government has announced two packages for airlines only, totalling $1 billion, these benefits have bypassed ground handling staff entirely.

Ground operations staff fulfil critical functions at airports, from assessing check-in passengers for suspicious behaviour, through to ensuring passengers, bags and cargo are correctly loaded and pilots have correct documentation so that aircraft are safe to fly.

The ground handling sector employs 16,000 people and processed more than 61 million domestic travellers[1] on 630,000 flights[2] in the last 12 months, and a further 42 million international travellers on 190,000 international flights[3].

Both Australian domestic airline groups, Qantas/Jetstar and Virgin Australia/Tigerair, use third party ground operational staff to keep their flights running, but can take up to four months to pay them.

If Virgin Australia fails to raise the money it says it needs to keep afloat, recent COVID-19 led changes to the Corporations Act could see many suppliers go unpaid, which would cause the aviation supply chain to collapse.

That is despite airlines receiving direct taxpayer subsidies.

Australia’s biggest ground handling company, Swissport, today warned that thousands of critical aviation safety and anti-terrorism jobs could be lost in coming days unless the Australian Government broadened its financial support beyond the airlines.

“Ground handling staff keep our borders secure and flying safe and without financial assistance, Australia will lose these critical functions that keep aircraft flying,” Swissport Executive Vice President Asia-Pacific Glenn Rutherford said.

“Australia cannot afford to lose these skills. Without experienced ground handlers, terrorist threats and organised crime will grow stronger once air travel restrictions are progressively lifted from this year.

“If our workers are made redundant, it will take years to relearn the security skills needed to adequately assess whether check-in passengers are a possible terrorist threat, and whether unaccompanied bags have mistakenly been loaded onto aircraft.

“More importantly, ground operators are the essential human infrastructure that airport operations and airlines depend on.

“We have hundreds of millions of dollars of bespoke equipment essential for aircraft handling, that will be progressively sold off to other markets in coming months if the liquidity crisis continues.

“Currently, we are paying more in staff car parking and airport fees than we earn by servicing flights in Australia.

“We are desperately seeking financial support from the Australian Government of about $125 million for a package of tax relief, creditor protection, loans and further wage support.

“While the JobKeeper package is welcome across the broader community, aviation is likely to be one of the last industries to have restrictions lifted, meaning the six month JobKeeper package won’t sustain jobs.

“Indeed, we have seen a 90 per cent drop in revenue, and with no foreseeable ending to the domestic and international travel crisis, JobKeeper actually increases overheads because it forces companies to accumulate employee annual leave, sick leave and redundancy entitlements, which will force many into insolvency.”

More than 90 per cent of non-capital city flights in Australia, 80 per cent of international flights and 40 per cent of interstate flights are handled by third party handling companies.

Since the pandemic and travel restrictions, the industry has been running at an unsustainable loss with revenue down by 90 per cent, while costs remain high.

Airlines around the world have stopped paying suppliers as they manage their own liquidity crises, with a risk that could now occur in Australia.

Ground handling services at UK airports have warned they will begin axing 10,000 employees within days unless ministers extend the government’s emergency wage subsidy scheme.

Media enquiries: Apollo Communications, Adam Connolly, 0417 170 084

[1] Table: Summary of annual RPT activity

[2] Table: Summary of annual RPT activity

[3] Table: Summary of year on year activity

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