As the coronavirus sweeps the world, both multinational companies and small, family-owned businesses are feeling the pain. But, why is it that it’s the big boys that seem to get all the help? You don’t need to be a rocket scientist to see that many global airlines are about to go bust, as news of airline bailouts make headlines. Their stock prices are tanking as fast as their passenger numbers.
This has been one of the hardest hit sectors, with massive cuts both in the number of flights and airlines forced to layoff staff.
Airlines Are Being Offered A Golden Lifeline During the Coronavirus Pandemic
Saving flag carriers used to be the done thing and was probably essential in order to provide reliable travel options for citizens. There used to be something deeply psychological about your own country’s airline. Not unlike banks, they simple couldn’t be allowed to go broke.
That world has changed, mostly fuelled by a huge rise in profits and very diverse ownership. As an example, IAG (parent to British Airways and Iberia) is now 20% owned by Qatar. Greed and profits have been on the rise for a decade in an industry that has been absolutely flying.
The largest US airlines spent 96% of free cash flow in the last decade buying back their own shares. American Airlines boasted of profits of $7.6 billion in 2014, and could have added to its cash reserves for a future crisis. Instead, they and others got greedy, and now they still want more.
The USA – and other countries such as the UK and Germany – are expected to prepare huge bailout packages for the airlines. The Trump administration is preparing to ask Congress for an $850 emergency stimulus, with a huge $50 billion directed specifically to helping the airline industry. When you compare that with the $15 billion boost that airlines received from the government following 9/11, it seems even more obscene.
Share The Bailouts to The Small Players to Keep Them in The Game
All jobs are important, and inevitable layoffs at mega airline companies are an unfortunate measure. But why should airline bailouts get priority over small cafes, restaurants, retail or service businesses? It seems grossly unfair.
What about the coffee shop down to its last $5,000 in cash who can’t pay their seven staff. The small travel guides who promote local communities and sustainability. The neighbourhood butchers, who know you by name. The corner stores. The food stall vendors. Why shouldn’t they get a $20,000 bailout? An amount that could save jobs and help preserve the fabric of society and daily life.
Tax payer money should absolutely be used to preserve as many businesses, jobs and key industries as possible. Maybe there is enough money to help both sides. I just know that I’d rather see money going into the pockets of small entrepreneurs who have never publicly listed on the stock exchange, don’t leverage their business beyond belief and put ‘enrich shareholders’ as a top priority.
Small Businesses Are The Heart & Soul of The Hospitality and Travel Industries
Tourism is important and airlines are key to that, but should we pour more good money after bad? The small bailouts – payments to people losing their jobs in small business – and keeping the high street functioning in some way should be given every bit as much as importance as bailing out airlines. If cities lose their heart and soul, will anyone even bother flying there when all this is over? I know I wouldn’t be as likely to visit Barcelona for a weekend if the local tapas restaurants are shut, or Hong Kong if street food is off the menu.
Help airlines by all means, but we shouldn’t forget the small businesses. They are the lifeblood of our society. Splash the cash, but splash it locally and on small businesses.
We should think about our local friendly barista still being there in two months time, our favourite music venue getting through this, or a small newspaper surviving. The airlines are big boys, and will get their bailout money thanks to their experienced tactics, lawyers, lobbyists and strategists.
Give the money to the small guys. They deserve and need it more.
See our tips on how to help small businesses during the coronavirus here.