Federal aid for Skyguide: Covid just a cover?

The federal government is helping Skyguide with half a billion. A report suggests that even without the pandemic, the company would have found itself in dire financial straits.

Not only the software of the Skyguide air traffic controllers is hardly understandable for non-professionals. The financial consequences of the pandemic are also complex.

Karin Hofer / NZZ

In the pandemic, the temptation for politicians to spend the money with both hands is great. Anyone who critically questions state aid is quickly seen as a heartless rap splitter. The role of the Swiss Federal Audit Office (SFAO) is currently all the more important. Like a fiscal watchdog, she investigates where taxpayers’ money is being wasted. As an independent authority that does not have to keep an eye on the next elections, it does so without emotion even during the pandemic. The SFAO recently dealt with federal aid for Skyguide. In a report, she expresses the suspicion that Swiss air traffic control could be renovated under the Covid guise.

The federal government wants to support Skyguide with CHF 500 million by 2022. In 2020, he provided the company with additional equity of CHF 150 million. Last summer, the federal government also granted the company a loan of 250 million. In the estimate for the current year, a further CHF 100 million has been reserved for a loan to Skyguide. According to the SFAO, it is “conceivable” that the federal funds will also be used for financing gaps that have nothing to do with the pandemic.

Cosmetic savings

It is undisputed that Skyguide is one of the companies that are suffering particularly badly from the pandemic. Because the airlines have cut their offer, the air traffic controllers have significantly less work. The number of flights controlled by Skyguide reached only about a third of the pre-crisis level in the first half of 2021. The result: Without the cash injection from the federal government, which owns more than 99.9 percent of Skyguide, the company would probably have had to file for bankruptcy. In return for the help, Skyguide has promised the Federal Council that it will save CHF 120 million by 2024.

From the point of view of the SFAO, however, this is not enough. The examiners locate cosmetics behind some of the cost-cutting measures. For example, Skyguide includes the short-time work compensation of 18 million francs that she applied for in Geneva. This may undoubtedly be a financial relief for the company. From the state’s perspective, however, this money flows from the left to the right trouser pocket. From the SFAO’s point of view, the fact that Skyguide counts a reduction in depreciation among the savings also belongs in the cosmetics department. Although this reduces the costs on paper, it does not change the liquidity requirements. The SFAO also complains that wage costs are expected to rise despite the savings plan.

Although Skyguide is planning to cut staff, the company expects wage costs to increase by around CHF 25 million by 2024. The reason for this is rising wages. Why is Skyguide not reducing personnel costs to relieve the taxpayer? According to a Skyguide spokesman, the company’s scope is limited. Wages are significantly influenced by the collective labor agreement. In addition, it does not make sense to reduce staff in advance. Training to become an air traffic controller takes at least three years. If you now lay off staff that you will need again after the crisis, it will not help anyone. In order to avoid such cases, there is the instrument of short-time work.

The SFAO auditors consider Skyguide’s financing needs to be fundamentally “understandable”. In their eyes, it is not the case that the support from the federal government is too lavish. On the contrary: According to the SFAO, there is a “significant risk” that taxpayers will have to pay for additional funds. The reason for this can also be found in Brussels. The tariffs that Skyguide can charge the airlines are generally determined by the EU Commission based on the air traffic agreement with Switzerland. In normal times, price regulation is intended to prevent air traffic control from exploiting its monopoly position. If Skyguide or other air traffic control services earn “too much”, they have to reimburse the airlines for part of the fees.

Brussels decrees austerity program

This is not a problem for Skyguide per se: as a non-profit company, it provides a public service. In the corona pandemic, however, the situation is exactly the opposite. Because of the drop in traffic, the income of air traffic control collapsed. The EU Commission has decided that air traffic control may charge the airlines for part of the losses – but only from 2023. Skyguide expects to be able to subsequently charge the airlines around CHF 280 million later.

However, since the federal government supports the company with 500 million francs, the help goes beyond a pure bridging loan. Some of the funds are also used to plug another financial hole opened up by the EU Commission. Skyguide has also decreed a savings program in Brussels. The SFAO doubts that the company can comply with this. If Skyguide fails to meet the EU requirements, the tariffs will no longer cover the costs. Therefore, the SFAO does not rule out that the company would have run into financial difficulties even without the pandemic.

A Skyguide spokesman disagrees with this assessment. The savings targets of the EU Commission were decided in the context of the pandemic. One consciously accepts that the states financially participate in the losses of air traffic control. The EU is about relieving the airlines. If this were true, another perspective would open up: the federal millions would be part of a contribution to a European aid program for airlines.

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