94 LEGAL IMPACTS OF COVID-19 IN THE TOURISM INDUSTRY borders, with the Civil Aviation Board allocating geographic regions and routes to particular carriers9. That changed during the Carter Administration, in the late 1970s, when the first steps were taken to deregulate the aviation industry. In a deregulated industry, legacy carriers who competed on services under the CAB-induced oligopoly had to compete on prices with new entrants who cut costs and service quality. Many carriers experienced bankruptcies, both legacy carriers and new entrants alike. However, by-in-large, the heightened competition led to overall growth, as well as to decreases in ticket prices. This was not without its detriments, deregulation also commodified the passenger ticket, leading to decreases in customer service and less comfort for passengers. By the 1990s, the US began pushing for a deregulated environment internationally10, with the development of the Open Skies agreements, which allowed airlines to set their own fares, rates, routes and capacities. Further liberalisation occurred in the European Union, with the advent of the European Common Aviation Area. Notwithstanding a push for liberalisation, several Bermuda-style elements carried forward into the Open Skies framework, the most notorious of those being substantial ownership and effective control. These provisions mandate that a certain percentage of airline ownership and control be vested in nationals of an airline’s home country. As a result, international mergers are impossible in this most international of industries. Nationalism – indeed, protectionism – is, in many ways, baked into the aviation industry due to safety, security and sovereignty concerns. These sentiments are shaping the response to the COVID-19 crisis and will likely shape the recovery as well. With these in mind, we turn back to our four scenarios. 3. BACK TO COVID-19: OUTLOOK AND THE FOUR POSSIBLE SCENARIOS 3.1. Scenario 1: Business as usual 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 9 See, generally, Andreas F. Lowenfeld, Aviation Law: Cases and Materials (1972). 10 Aqsa Mahmud, “International Air Services Agreements,” in David Heffernan & Brent Connor, eds, Aviation Regulation in the United States (American Bar Association, 2014) 23, 25-27.
RkJQdWJsaXNoZXIy MTE4NzM5Nw==