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

dividend for 2019, and may sell some aircraft. The steep fall in the oil price ought to help, but many airlines will only feel the benefit later, having previously locked in purchases at higher prices to hedge against the risk of pricier fuel. Governments are offering some assistance. To help Norwegian, its home government has removed aviation taxes. Moreover, in an effort to prevent wasteful ghost flights with no passengers, which some carriers have been flying to preserve valuable take-off and landing slots at busy airports, regulators around the world have temporarily waived rules that require slots to be used at least 80% of the time. Plenty of carriers are also scaling back capital expenditure by deferring the purchase of new aircraft: Airbus, Europe’s aerospace giant, has agreed to delay some deliveries to Chinese airlines, and Cathay is discussing deferrals with both Airbus and its American rival, Boeing. Airlines are also asking leasing companies, which have rapidly grown over the past decades and now own around 50% of the global fleet, to show forbearance overpayments. However, not every airline will survive the pandemic, with Europe having already seen one casualty – Flybe, a British airline with underlying financial-health issues, declared bankruptcy on 5 March. Moreover, Norwegian’s share price, which had lost 80% of its value between 2016 and 2019, has now shed another four-fifths since February. In Europe’s fragmented aviation market, a third of carriers, mostly small no-frills ones, either lost money or barely broke even in 2019, according to bank Citigroup. Carsten Spohr, Lufthansa’s CEO, predicts “numerous insolvencies”. The carriers which will make it through will enjoy less crowded skies – and more pricing power. A shake-out in Europe, long plagued by overcapacity, would benefit companies with strong balance sheets, these include EasyJet, Ryanair and IAG. Weakened airlines like Norwegian, and possibly even more illustrious liveries, may become acquisition targets. This will only happen if the recovery is swift, however. The longer the pandemic lasts, the less certain travel patterns are to revert to normal. In a worrying sign, the CEO of one big leasing firm says that even firms with apparently robust balance sheets have asked him to go easy on rent, suggesting at least some are worried about survival. If more airlines start to fail, that would have knock-on effects throughout the broader aviation industry. Even before President Trump’s prohibition, American airport operators were expecting to lose at least 3.7B $ between them, this year. Weaker airports could come under pressure and may not survive, making some regions less accessible even if conditions eventually improve. Airbus and Boeing are making fewer planes and look likely to rethink plans for ramping up production of narrow-body airliners. Falling profits will weigh on efforts to invest in new climate-