27
Apr
20
Articles, Travel & Cross Border Claims
The Weekly Roundup: the Continuing Impact of Covid-19 on the Travel Industry

If Covid-19 can be compared to a butterfly, and we think it can, the effects of its flutterings are starting to be felt in increasingly unexpected ways. Who could have predicted that, as we reported last week, a South Korean resort would be bringing proceedings against two tourists; or that the Hawaiian Tourism Authority would be paying visitors to leave? And yet, so it is. This week members of the 1 Chancery Lane travel team dust down their crystal balls and try to imagine what post-lockdown holidays will look like. In the words of that great mystic Yogi Berra, “it’s tough to make predictions, especially about the future”.

 

The European Commissioner for the Internal Market’s ‘Marshall Plan’ for European Tourism

On 22nd April the European Commissioner for the Internal Market, Thierry Breton, set out what he called a ‘Marshall Plan’ for European Tourism. Readers with an interest in history will recall that the original Marshall Plan was a programme of financial and other aid sponsored by the US after World War II. It was designed to assist Western European countries in rebuilding their economies, and thus restore political stability to the region, at a cost to the US of over US$12 billion. It was also intended to encourage Western Europe to turn from communism and towards alliance with the United States of America. So, can we expect to see the EU requesting today’s equivalent sum of US$128 billion from Donald Trump? Or Vladimir Putin?

Sadly, no. M. Breton’s Plan consists of a two stage process: first, emergency measures, and secondly, a reformation of the entire tourism sector.

Predictably, the emergency measures M. Breton proposes relate to ensuring immediate financial liquidity within the industry, via the European Investment Fund and the Coronavirus Response Investment Initiative. He also envisages gradual resumption of freedom of movement within and outside the EU so as to stimulate the re-establishment of touristic travel.

In the medium to long term M. Breton envisages lasting change to the travel industry. He advocates a more environmentally friendly and sustainable sector, with more local tourism and less environmental collateral damage; more co-operation between the traditional providers and large digital platforms, which, he believes, must take greater responsibility for consumer protection; and a strategic approach to protecting European cultural heritage. He warns against foreign investors snapping up ‘European jewels at a lower price’ during the current crisis; a nod, perhaps, to fears over Chinese and Middle Eastern investment in particular, and one the UK would do well to heed.

It is good to see the EU turning its attention to the huge challenges faced by the industry; M. Breton describes the situation as a ‘very serious crisis’ and the industry as ‘one of the hardest hit sectors, if not the hardest’. He estimates that revenue losses at European level are 50% for hotels and restaurants, 70% for tour operators and travel agencies, and 90% for cruises and airlines. Clearly, this is not sustainable; but since, as he also observes, no one knows how long the situation will continue, it will be increasingly necessary for the EU to assist those businesses, many of whom are small and medium sized. We have already reported on the German TUI bailout; much, much more needs to be done, and it would be encouraging if the UK government were to present the industry with its equivalent of the Breton Plan (the Boris Boost? the Sunak Spend?) sooner rather than later.

It would be remiss, however, not to note that not everyone agrees with the EU’s approach. Michael O’Leary, the never knowingly uncontroversial chief executive of Ryanair, wrote to the EU’s Competition Commissioner, Margrethe Vestager, on 9th April notifying her that he may mount a legal challenge to the efforts of European nations to bail out their national flag carriers. Any such challenge will cast into disarray efforts by France and the Netherlands to bail out Air France-KLM, by Germany and others to bail out Deutsche Lufthansa, and by Italy to take control of Alitalia, now bankrupt. In typically sensitive style, Mr Leary has described the national flag carriers as “the crack cocaine junkies of the state-aid world, because their first instinct is to always go to the government for state aid”. The European Commission has declined to comment on his challenge.

Thank goodness Mr Leary and Willie Walsh have always got on so well.

About the author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade.

 

Smart Holidays: A Way to Revitalise the Travel Industry?

During the coronavirus pandemic, many of us have had to adjust to the reality that our summer holidays this year are unlikely to take place. Many countries remain in a state of lockdown, with no clear date given as to when social restrictions are likely to be lifted. This has, naturally, caused great concern throughout the travel industry. With the recent news that Virgin Australia has entered into voluntary administration, there is a fear that there will be other corporate casualties across the travel industry as global lockdowns continue.

In the short term, some tourist resorts and tour operators are planning to increase the cost of holidays in order to recoup some much-needed revenue; others, such as Sicily, aim to lure travellers back by slashing prices. The Sicilian region lost about €1 billion in tourist revenue in March and April, and is keen to stimulate tourism as soon as the Italian lockdown ends on 4th May. The regional government has announced a package of measures including paying for half the price of travellers’ plane tickets, one in every three of their hotel nights, and all entrance fees for museums and archaeological sites.

In what some will see as a rather pointed move, the Balearic islands of Spain plan to re-open to local tourism, and then to the wider European nations, but initially not to UK tourists, citing as their reason the tardiness of the UK lockdown (the UK announced isolation measures a week after the Spanish government’s lockdown). Whether UK travellers will come flooding back, or whether this staged approach will lead to a permanent loss of tourism, remains to be seen.

In the longer term, a solution may lie in the form of ‘smart holidays’. You often hear the word “smart” compounded with nouns to name new technological products that are considered ground-breaking in their sophistication. In the context of a holiday, this would constitute innovative, ‘smart’ measures being taken to reduce the risk of holidaymakers contracting coronavirus, and thus allowing holidays to go ahead. In a recent interview, the European Commission President, Ursula von der Leyen, expressed optimism at the concept.

But what would a ‘smart holiday’ actually entail? One idea proposes the installation of plexiglass beach boxes, allowing holidaying households to set up and sunbathe within the confines of transparent plastic sheeting, permitting the passage of sunrays but, more importantly, reducing the risk of infection. There is, of course, the considerable risk of overcooking in what is essentially a greenhouse.

Some countries have formulated their own ideas as to how to revive tourism in the pandemic. In Greece, the concept of a ‘health passport’ has been proposed: it is, in essence, a glorified doctor’s note stating that you are clear of the virus and safe to travel. Other countries, such as Austria, have speculated that overseas visitors may be permitted to enter on the basis of bilateral agreements with their home nation. There are even reports suggesting that dogs could be trained to detect coronavirus in passengers arriving at UK airports. The EU is seriously considering imposing temperature checks and blood tests for airline passengers.

For airlines, the waters are far murkier. EasyJet has suggested that the middle seats on its planes could be kept free until the pandemic subsides. On the other hand, Ryanair has warned that its fleet would not return to flying if governments insisted upon the middle-seat clearance. Other proposed measures include the addition of a protective glass barrier between seats to ensure maximum isolation during travel; but in all cases it is difficult to see how effective prevention measures could be put into place in the closed environment of an aircraft.

As with everything coronavirus-related, a vindication of good policy is still a long way off. However, at first glance, there are certain difficulties to overcome. For the under-filled flights, it is unlikely that a distance of two metres and a gap of one seat on a plane would currently comply with the six-feet social distancing radius, across which the virus is unlikely to leap. In addition, under-filled planes will no doubt increase the cost of flights, which could turn away prospective travellers. As to the health passports, the current time lag between testing and results, and the difficulties of test accuracy, make this an awkward solution from the outset. What can be said with certainty is that it is inevitable that all of the measures suggested will take time to implement, and their efficacy will not be immediately apparent.

The holiday industry is, undoubtedly, one of the hardest hit by the coronavirus pandemic. An attempt to restore consumer confidence, once lockdown measures are relaxed, is to be applauded and will be critical to revitalise the industry. The importance of holiday providers being seen to take measures to reduce risk and to bolster demand is hard to understate. Consumer comfort is the currency that matters. Those who would otherwise be too frightened to fly, hotel-hop and sunbathe, may well forego their concerns in the knowledge that providers are doing what they can and are innovating where possible to maximise safety. Nonetheless, it remains to be seen as to whether smart holidays will be smart enough to convince the public to travel.

About the authors

Dominique Smith was called in 2016 and undertook pupillage in chambers under Jack Harding, Andrew Spencer and Sophie Mortimer. Her experience as a pupil in the field of travel law translated into a busy practice, and she is now a highly regarded practitioner within the area in her own right. She undertakes work for both Claimants and Defendants and has a particular interest and expertise in Coroners’ Inquests.

Tom Yarrow is chambers’ latest acquisition, having been called in 2018. Before joining chambers Tom was a civil servant working in various government departments, including as a policy advisor on the UK-EU Withdrawal Agreement at the Department for Exiting the European Union. During pupillage he worked with the Government Legal Department, practising in public law in the fields of public international law, justice and security, human rights and immigration. He has regularly appeared in judicial review proceedings for the Secretary of State for the Home Department, and as a member of the Attorney General’s ‘junior junior’ scheme, he is able to take instructions directly from government clients. He now practises in all of chambers’ practise areas and is an enthusiastic and valued member of the travel team.

 

…and finally…

In what may seem a counter-intuitive venture, the Hawaii Tourism Authority is advising against visiting the island, and has set aside US$25,000 to help pay for tourists to leave. On 1st April Governor David Ige imposed a 14 day mandatory quarantine on out-of-state visitors to the island, and five days later the President of the Hawaii Visitors and Convention Bureau wrote to various publications asking them not to promote tourism to the state, but to ‘strongly discourage travellers from visiting Hawaii until otherwise directed’. Since that time a number of quarantine violations have been identified, the miscreants prosecuted and fines levied; and nineteen tourists have been repatriated to their airports of origin. The Visitor Aloha Society has arranged for the repatriations and will pay for them if the tourist is unable to do so by reason of impecuniosity.

At first sight this seems an odd use of publicity and funding; but the HTA points out that the danger posed by out-of-state visitors is a real and potentially costly one, both financially and in terms of the health of the island’s population, and it is hoped that taking such robust action will prevent a repetition of the experience of the South Korean island of Jeju, about which we reported last week.

About the author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade.

 

 

Written by or involving: Sarah Prager, Dominique Smith, Thomas Yarrow

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