Government announces €115 million support package for air transport sector

The Greek government on Thursday announced a package of measures amounting to €115 million to support the country’s air transport sector, hit hard by the lockdown to contain the spread of the new coronavirus including the grounding of flights.

“Sectors such as air transport which is directly linked with tourism ... are in need of a special support framework as they have a systemic significance for the country's economy,” Greece’s Finance, Labor and Transport ministries said.

The package includes a cut in VAT tax to 13% from 24% from June 1 to end-October, estimated to cost the government foregone income of about 30 million euros.

The government will also replace the income tax on pilot, cabin crew and technical staff pay with a permanent 15% tax rate, which will lower the wage cost for companies in the sector by about 7.7 million euros annually.

It will also pay airlines servicing routes partly subsidised by the government, such as to remote islands, an extra €20 per offered seat including VAT, estimated to benefit the sector by 6 million euros.

Greece’s air transport sector employs about 11,000 and is important for tourism as up to 85% of tourism revenues from the total of €18 billion earned last year, comes from tourists arriving to Greece by planes, the ministries said.

The government will also social security contributions for all employees in the sector for the entire period when they will not be working, estimated to cost about €50 million.

Greek carriers, ground handling and airports have performed strongly in the last years thanks to high inflows of tourists and are not in need of huge amounts of support, or capital injections as in other EU countries, the ministries said.

In response, Aegean Airlines stated that the announced measures to "support the airline sector are positive, but the figures are small compared with other EU countries."

The Greek airline company said that these measures cover the whole airline sector, airport companies, ground handling and airlines of any size horizontally, without any advantages over anyone.  At the same time, by resorting to the State Guarantee Fund, Aegean will apply for borrowing at all four systemic banks for a sum of €150 million, or 11 pct of its turnover. The airline company said that the basic measure is the support of workers to December 31, 2020, offering a 60 pct coverage to income losses in case of reduced employment. Similar programs already apply in the EU, particularly in northern Europe, with significantly higher support on labor cost for employers.

The measures must continue and evolve, and it is necessary to expand them until the start of the tourism season in 2021, the airline said.

It stressed that it will fight with its own powers, its own reserves and its own people. "The goal is to bring passengers back to use by adhering to the new hygiene protocols. And as always, we will lead this effort with all our powers and with pride," it noted.