15th May 2020

Does Stansted deserve a bail-out?

The Government is being put under huge pressure by UK airports and airlines to provide financial assistance during the current crisis. Does Stansted deserve a bail-out?
Manchester Airports Group (MAG), which owns Stansted, is cash rich. It has paid its shareholders £489m in dividends in the past three years. If taxpayer money were to be provided to MAG, it would need to be on condition that no dividends were paid to shareholders until the loan had been repaid.
In terms of its importance to the UK economy, Stansted is predominantly a leisure airport. Business travel accounts for just one in every eight passengers and will decline further in the future as companies increasingly use video-conferencing as a lower risk and lower cost alternative.
Leisure travel is the dominant function at all UK airports and, last year, outbound UK tourists out-weighed inbound tourists by almost two to one, generating a staggering £22.5 billion UK balance of payments deficit. In that one respect, Covid-19 is delivering a major benefit to the UK economy.
Airlines pay no fuel tax and no VAT, so there is no revenue loss to the Government in those areas. In fact the Government reimburses airlines for any VAT which they do pay. Airlines (or rather their passengers) do pay Air Passenger Duty but this is set at a level which raises just a quarter of the value of the tax exemptions on aviation fuel and VAT.
A key consideration is, of course, to protect the jobs of airport workers, and about one in every six Stansted employees is a resident of Uttlesford. The Government’s furlough scheme goes a long way to protect jobs by funding 80% of wages. Despite this, airport workers have been laid off, and many are sub-contractors who don’t have this protection.
Meanwhile, Stansted’s management have taken a 10% pay cut, which some have described as a half-hearted gesture compared to Gatwick and Luton airport management who have taken a 20% pay cut, and Heathrow executives have agreed to take no salary for the next three months.
If asked for financial help, the Government may well be less sympathetic towards a cash rich company whose management seem reluctant themselves to make meaningful sacrifices.

Campaigning against proposals to expand Stansted Airport