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When you Just Want to Fly

When you Just Want to Fly

The effects of Covid will likely been seen in the economic collapse of many businesses in the autumn. While most societies have organised themselves to some degree to handle any future waves of the virus, the commercial effect will likely start to show signs of a deteriorating economy over the fall and winter months. Smaller and medium sized businesses may bare the brunt of the losses as they often have less of a cushion, still are dedicated to cover the costs of rent and utilities towards governments that have surprisingly given little breaks to those companies and smaller property owners, and are often working using credit through their banks or other means. Since the 2008 economic crisis little had been done in the banking industry to ween smaller companies off lines of credit coming from banks and financial institutions, and when that dependency turns into an immediate recall of operating funds, many businesses folded in 2008. It will certainly occur again in 2020.

When asked, many people say that their first act after any lock-down will be to take a vacation. Many in country or regional trips have taken place as it is less risk to individuals healthwise and to their funds if a trip is cancelled due to an outbreak. Many who had trips planned before Covid have been unable to get their funds back from their airline, as consumer protection laws were rapidly adjusted so that airlines did not have to refund postponed or delayed flights. This left consumers who normally had protections on their payments without recourse, as when the governments adjusted the laws in favour of the companies, consumers suffered. The logic behind not having an airliner or other large business refund all of the customers at once is to keep those companies solvent to perhaps apply the service or refund at a later date, and preserve the company and the jobs of their employees.

While smaller businesses are often dependent on credit from banks in order to operate, larger companies often have the pull and can hire dedicated people to improve their financial standing in a country. While the travel industry is aching to return, the airliners themselves may hinder further growth. Airlines often operate with little profit margins, as leasing aircraft, changes in international fuel prices, insurance and little profit from the fare on each seat eats greatly into their industry’s gains. Like many smaller businesses, credit has been used extensively in the airline industry to keep them afloat. With the effects of Covid, the airline industry has really be put on a leash as losses very rapidly took over profits in a very short time. Due to the amount of credit depended upon and small profit margins, even national carriers are hanging by a thread. For years, each time I would enter the court house in my country, our national carrier was in bankruptcy hearings constantly, and this was the case on every occasion. This was the best case scenario, in the best of times. It is likely the case that the longer effects of Covid on the economy will open any cracks in our systems and it is important that time and money are not wasted if jobs will be available in the future. Most of these positions will not return if the opportunity is squandered.

 

Author

Richard Basas

Richard Basas, a Canadian Masters Level Law student educated in Spain, England, and Canada (U of London MA 2003 LL.M., 2007), has worked researching for CSIS and as a Reporter for the Latin America Advisor. He went on to study his MA in Latin American Political Economy in London with the University of London and LSE. Subsequently, Rich followed his career into Law focusing mostly on International Commerce and EU-Americas issues. He has worked for many commercial and legal organisations as well as within the Refugee Protection Community in Toronto, Canada, representing detained non-status indivduals residing in Canada. Rich will go on to study his PhD in International Law.

Areas of Focus:
Law; Economics and Commerce; Americas; Europe; Refugees; Immigration

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