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JUNE 2021


Shortsighted governments failing flag carriers

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June 1st 2021

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In normal times, the reluctance of governments to inject additional cash into their State-owned airlines would be understandable, particularly if the management of the carriers has been questionable and profits never come. Read More »

At times, these losses were the result of government interference rather than bad management. But in the period of the pandemic, undoubtedly the worst crisis in the history of aviation, the decision of some governments to withhold even minimal assistance to their national flag carriers is not only deplorable, but shortsighted from national economic perspectives.

Flag carriers do exactly what the name suggests. They carry their nations’ flags across the globe, cementing trade links and communications with the world. Operated properly, high quality and recognizable brands such as Singapore Airlines, Qantas Airways, Korean Air and All Nippon Airways reflect national standards and bring prestige to their countries.

It is extremely difficult therefore, to understand why some governments in Southeast Asia – Malaysia, Thailand, Indonesia and the Philippines in particular – have been lagging far behind the rest of the region in providing maximum backing for their home airlines. Thailand’s military government, for example, has done little to sustain its troubled flag carrier, Thai Airways International.

Nor has it offered relief to other local airlines, including Bangkok Airways, Nok Air, Thai VietJet and Thai AirAsia, when it is absolutely needed. For more than a year these regional carriers have sought soft loans from Thailand’s government to help stay alive during the pandemic. Initially they collectively asked for US$770 million – to no avail. In desperation, they reduced the amount to $450 million. To date, no funds have been approved and Thailand’s leadership has gone silent on the matter.

In most of the Asia-Pacific, and in much of the rest of the world for that matter, governments have recognized the importance of airlines and aviation in general to their economies. They have provided government backed loans or even direct subsidies to carriers, supported retrenched staff with wage subsidies, suspended or reduced fees and charges for airlines and taken other policy positions to underpin the operations of their airlines. Singapore’s establishment of a US$11.3 million fund to support Changi Airport staff affected by enhanced safety measures is a recent example of enlightened government policy that its neighbours could well apply to their own airline and airport sectors.

As a result of such short-term thinking, some of Southeast Asia’s carriers, particularly the smaller ones, may not make it to the other side of the pandemic.

The Asia-Pacific is a tourism hot spot. As international air traffic begins its recovery, any shrinkage in local airline services will mean more profits from flying in the region will be snapped up by foreign carriers, causing much longer term damage to several of Asia’s mid-level and emerging economies.

Associate editor and chief correspondent
Orient Aviation Media Group

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