RUTH SUNDERLAND: Why Britain MUST bail out Richard Branson – however mad it may sound for the taxpayers to save a billionaire
- Richard Branson’s Virgin Atlantic airline is under serious threat due to COVID-19
- Virgin announced they would be cutting 3,150 jobs on Tuesday afternoon
- Other airlines such as Lufthansa and Air France-KLM are in need of financial aid
- Here’s how to help people impacted by Covid-19
Normally, the idea that taxpayers should bail out a billionaire who lives on his own private Caribbean island would be treated as a bad joke.
But these are not normal times. And if ministers let Richard Branson’s Virgin Atlantic crash into the ground, we will all be the poorer for it.
Virgin Atlantic, like many airlines around the world, has been devastated by the coronavirus pandemic.
Richard Branson’s Virgin Atlantic (pictured) airline is under serious threat due to the coronavirus pandemic
Virgin announced on Tuesday they would be cutting 3,150 jobs in order to avoid going bust during the global health crisis
The situation is now so desperate that even when the global lockdown is relaxed, the economics of air travel will be extremely difficult.
Aware of this, the International Air Transport Association has been beseeching governments for help. Many countries – though not the UK – have obliged with multi-billion pound lifelines.
The French and Dutch governments are bailing out Air France-KLM, their flag carriers which merged in 2004, to the tune of up to £9.5billion.
Germany’s Lufthansa is in talks with its government over a state lifeline, while, biggest of all, President Trump bankrolled a £20billion rescue package for US airlines.
But on these shores? Not a bean, despite the fact that this is by far the worst crisis since mass air travel began. Coronavirus makes the aftermath of 9/11 look like a blip.
German airline Lufthansa (pictured) is in talks with the government over a state lifeline
Meanwhile Air France-KLM are being bailed out by the French and Dutch governments to the tune of £9.5billion
And not only airlines, but airports, too, face a frightening future. Gatwick is staring into the abyss after Virgin and BA stopped flights there.
Yet despite the threat, Chancellor Rishi Sunak has been squeamish about offering help. Perhaps he fears voters would be disgusted at showering largesse on the likes of Branson, whose pleas for a £500million bailout have fallen on deaf ears.
There is no denying that the tycoon, worth almost £3.5billion, is a divisive figure. He has been criticised for failings in his rail franchises, for his opaque corporate structures and for his apparent aversion to paying personal taxes in the UK.
Yet at the same time, his Virgin brands are popular and his airline brought a dose of competition to BA.
It’s true that he has already reaped plenty from the UK’s coffers. The takeover by Virgin Money of Northern Rock cost taxpayers nearly half a billion.
Many will sympathise with Ryanair’s Michael O’Leary, who said Branson can ‘bail himself out.’
But the future of Virgin Atlantic is about significantly more. For ultimately, a healthy airline industry needs to be a competitive one. Yes, BA has said it will not tap taxpayers for cash.
Branson’s airline has brought a popular airline to the forefront of people’s minds and provided solid competition for British Airways
But this is a calculated gamble. If Virgin Atlantic goes to the wall, BA will be left with a near monopoly.
And if Gatwick is out of the game, Heathrow will have no competition either.
That prospect is not good for travellers. Nor is it good for Britain and our hopes of being a great post-Brexit, post-Covid global trading nation.
One solution would be for the Government to take a share stake in airlines as it did with the banks after their collapse, and in return to exert control over pay and bonuses.
But whatever happens, allowing a major airline to collapse is not an option.
It’s time for Mr Sunak to bail out Branson – even if he has to hold his nose while doing it.