State outlines Air Serbia aid package plans

The Serbian Ministry for Construction, Transport and Infrastructure has drafted several strategies to financially assist the country’s national carrier which has been grounded by the coronavirus Covid-19 pandemic since March 20 and has so far incurred over thirty million euros in losses. According to the ministry, the country will provide direct fiscal support as its main mode of assistance. The amount will depend on the final financial fallout from Covid-19, as well as the sum required to strengthen Air Serbia’s role in the wider Balkans, which it notes “is currently very plausible”. It said it was difficult to approximate an exact sum the state would invest in the national carrier but noted the assistance would be continuous and in line with the government’s priorities, needs and possibilities.

Four different aid proposals have been made for Air Serbia. “One of them is providing assistance in overcoming existing losses the airline has incurred due to the ban on commercial flights during the duration of the recession in the air transport sector. Another is to cover the losses for the transport of passengers and cargo”, the Ministry for Construction, Transport and Infrastructure said. It added, “First and foremost we will discuss relief for taxes and utilities, especially those payable to the state. A decision on whether and when the state would increase its ownership stake in Air Serbia would depend on the conditions and our financial capabilities after the the state of emergency is lifted in the country” (expected later this week).

The ministry also noted it would cover damages caused to the interior of Air Serbia’s aircraft which have been transporting tons of medical supplies and equipment from China over the past month on almost thirty flights. “Air Serbia will report all the costs and damages associated with these flights”, the ministry said. According to the country’s Deputy Prime Minister, Zorana Mihajlović, the airline is estimated to record a sixty-million-euro loss from the ongoing Covid-19 pandemic. Air Serbia has tentatively scheduled its resumption of flights for May 18 when the country’s airports are expected to open. A Notice to Airmen (NOTAM) - an aviation document informing all carriers of important and urgent messages – issued by the Serbia and Montenegro Air Traffic Services Agency last week banning all commercial flights in and out of the country until May 30 has been revised and brought forward to May 18.

The International Air Transport Association (IATA) - the representative body for the global airline industry - and Airports Council International (ACI) - which represents the world’s airports - issued a joint appeal to governments last Thursday to rapidly provide financial support to airlines and airport operators due to the severe effects on both sectors of the travel restrictions and lockdowns imposed by many countries. “Governments will depend on aviation to be ready to lead an economic recovery when this pandemic is behind us”, IATA Director General and CEO, Alexandre de Juniac, said. He added, “Governments must act now with financial lifelines that only they can provide for airlines and airports to see them through these extraordinary times”. The head of ACI World, Angela Gittens, said, “The financial impact of the current crisis is unlike anything we have ever seen and requires urgent action by governments to assist the aviation industry to protect jobs, ensure essential operations, and plan for recovery. Urgent tax relief and direct financial assistance that is to the benefit of the entire aviation ecosystem is needed to help preserve millions of jobs, protect essential operations, and foster a balanced recovery”. IATA and ACI jointly called on governments to provide tax relief for airlines and airports. This would include reducing or waiving payroll taxes, corporate taxes and other levies on the sector. They also appealed for loans, loan guarantees or “direct support” to ensure the aviation ecosystem maintained financial liquidity.