A lost decade for the travel industry

Hawaii just enacted a very strict coronavirus scheme that will force nonresidents to quarantine in place for 14 days once they arrive on one of its islands. The quarantine will be in effect even if the visitor tests negative for COVID-19.

Why is this a major issue? The recent spike of coronavirus infections on the U.S. islands of Hawaii will force the state to lose a major part of the valuable summer season for vacation tourism, an industry that fuels the local economy. And Hawaii isn’t the only state doing so.

Florida and New York continue to require out of state visitors to take similar measures, and Alaska just ramped up its enforcement of quarantine rules after it too had a spike in incidents. The coronavirus has already bankrupted tens of thousands of firms including nearly every major airline that didn’t get government assistance. Luckily, most American airlines were already bailed out by the U.S. Congress in March after passing a multibillion-dollar six-month package that expires on Oct. 1. The good news for them is that it just passed another $32 billion bill that will fund airlines until April 2021.

The reason behind all of this is that even if the coronavirus disappears tomorrow, the impact of this long, drawn-out pandemic has caused many businesses to come to a screeching halt. It has also cratered the demand for travel for many tourists who now prefer staycations out of fear of the virus. Businesses have adapted to online meetings, and the concern is business travel may never bounce back.

So what are the options? Governments can either bail out airlines now, or the airlines will go out of business, their employees will go on unemployment and taxpayers will end up footing the bill anyway. Perhaps it’s best to prevent the airlines from declaring bankruptcy in the first place and keep them afloat.

These latest restrictions will mean air travel will take years to recover, and, short of a complete takeover of the industry by governments, countries have no choice but to continue to support the sector. If Washington doesn’t rescue the airlines, hundreds of thousands of employees in the U.S. alone will go on unemployment and ultimately be fired by an industry that is now a shell of its former self. At that point, governments will nationalize the collapsing companies lest this service isn’t deemed profitable and airlines disappear altogether.

Like with so many things, the long-term impact of the coronavirus pandemic has yet to be felt, but the early warning signs say this is a tidal wave that will cause ripples for at least the next decade.

Hawaii island

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