The Legal Impacts of COVID-19 in the Travel, Tourism and Hospitality Industry

5 Therefore, there will be bankruptcies, reorganisations and consolidation in the aviation market. Regulations will be put into place to ensure the viability of the aviation industry in times of crisis, including minimum levels of operational expenditure capital and perhaps fresh looks at competition and antitrust laws, with the focus shifting from prices to market structures. It is hard to imagine the industry looking the same again. Scenario two: Chicago/Open Skies, with caveats The second scenario is that some change will come. This scenario envisions an attempt to keep the current Chicago/Open Skies model, with adaptations to the new environment. The measures mentioned above – reorganisation and consolidation, capital reserve rules, new competition law enforcement schemes and new public health measures – will likely be necessary to maintain the industry, making the status quo impossible. Such a measure might preserve the Chicago/Open Skies model, but the industry will look markedly different post- COVID-19 pandemic. There will be fewer airlines, and the industry will be forced to evolve towards the US model, in which four large, mega-profitable airlines functioned under strict capacity discipline. Gone are the days of airlines in Europe and Asia pricing at marginal costs in order to gain market shares. The downside of the Chicago/Open Skies model is that prescriptive ownership and control rules will still prevent the natural flow of capital across borders. In essence, reorganisations will be at the national level with no cross-border mergers, leaving markets with anaemic air carriers struggling and prey to larger carriers coming from wealthier States. Thus, the forces of globalisation will continue to be frustrated under Chicago/Open Skies, and the aviation industry will continue to be entrenched in nationalist concerns. Scenario three: Return to Chicago/Bermuda The third scenario refers to the return to a model based upon the Chicago/Bermuda, in which air carriers are treated like public utilities providing essential services. To place this in context, we summarise the development of the aviation market again. Reaction to the World War I brought us closed borders; visionaries at Chicago thought of a new way but could get only so far in creating an open market. The result of compromise was something akin to government utilities – flag carriers serving nations and buoyed by government interventions. As discussed above, the Open Skies agreements have their faults, but if we take the EU-US Open Skies agreement as a high-water mark of liberalisation, then it took 71 years for the aviation industry to move from a public utility model to a market-based model. That makes a return to life under Chicago/Bermuda the most dystopian of prospects, yet, things appear to be moving in that direction.