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

4 The first scenario is that the aviation industry returns to business as usual – the pandemic ends and everything reverts back to the way it was in 2019. Given the economic downturn that is predicted to follow in the wake of the COVID-19 crisis, this scenario is the least likely to come to fruition, though it might be the most desirable for airlines. Airlines are burning through the little cash reserves they have, with estimates on expenditures to be 61B US$ in second quarter of 2020, simply to maintain some normality during the pandemic, not count the 35B US$ in refunds due to passengers whose flights have been cancelled. On average, the majority of carriers are guessed to have enough capital to maintain the status quo for 1-2 months. Bankruptcies are on the horizon and the spectre of laws mandating that air carriers maintain a certain level of capital, similar to rules for banks put into place following the financial crisis of 2008, has arisen. Recovery prospects are uncertain. No reasonable economic forecast predicts that passenger volumes will return to the 2019 levels before 2021 10 . Lockdowns will be eased on a region/country basis, and costs will go up as efficiency goes down: social distancing means lower load factors and slower airport throughput; health monitoring and disinfecting aircraft and airports will increase turn-around times. In Europe, fleets are grounded, operating minimal services or using passenger cabins to haul cargo 11 . Wisely, the EU suspended ‘ghost flight’ rules in response to the COVID-19 crisis 12 . In the US, air carriers are still flying because the US Congress provided more than 50B US$ to the aviation industry, but conditioned those funds on the maintenance of certain levels of services, leading airlines to operate flights with few-to-no passengers 13 . Analysts speculate that US carriers would be better off grounding fleets and refusing grants and government-subsidised loans, as maintenance of air services with such low load factors will cost more than the US Congress has allocated to support the industry 14 . 10 See, ICAO, “Effects of Novel Coronavirus (COVID-19) on Civil Aviation: Economic Impact Assessment (16 Montreal 2020 ) https://www.icao.int/sustainability/Documents/COVID-19/ICAO_Coronavirus_Econ_Impact.pdf ; See also, IATA, “Economic Chart of the Week” (17 April 2020) https://www.iata.org/en/iata- repository/publications/economic-reports/return-to-air-travel-expected-to-be-slow/ . 11 Respectively, Jasper Jolly, “EasyJet ground entire fleet of planes because of coronavirus crisis” The Guardian (30 March 2020) https://www.theguardian.com/business/2020/mar/30/easyjet-grounds-entire-fleet-of-planes- because-of-coronavirus-crisis ; WilliamWilkes, “Lufthansa to Slash Fleet, Shutter Germanwings in Virus Response” Bloomberg (7 April 2020 ) https://www.bloomberg.com/news/articles/2020-04-07/lufthansa-to-scale-back-wide- body-fleet-close-germanwings-unit ; Will Horton, “These Airlines Will Next Remove Seats to Carry Cargo and Medical Supplies on Passenger Aircraft Turned Into Freighters” Forbes (13 April 2020) https://www.forbes.com/sites/willhorton1/2020/04/13/these-airlines-will-next-remove-seats-to-carry-cargo- and-medical-supplies-on-passenger-aircraft-turned-into-freighters/#36c53a096093 . 12 Sam Morgan, “Coronavirus: EU to suspend ‘ghost flight’ rule for 4 months” Euractiv (13 March 2020) https://www.euractiv.com/section/aviation/news/coronavirus-eu-to-suspend-ghost-flights-rule-for-4-months/ 13 US Department of Transportation, Final Order on Continuation of Certain Air Services, Docket DOT-OST-2020- 0037 (7 April 2020) https://www.transportation.gov/sites/dot.gov/files/2020- 04/CARES%20Final%20Order%20FINAL.PDF . 14 See, e.g.: Julia Musto, “Aviation experts say airlines would be better off shutting down as pandemic saps demand” Fox News (16 April 2020 ) https://www.foxnews.com/media/aviation-experts-say-airlines-need-to-shut- down-as-pandemic-saps-demand .