NEVER LET A CRISIS GO TO WASTE 97 3.3. Scenario 3: Return to Chicago/Bermuda The third scenario refers to the return to a model based upon the Chicago/Bermuda, in which air carriers are treated like public utilities providing essential services. To place this in context, we summarise the development of the aviation market again. Reaction to the World War I brought us closed borders; visionaries at Chicago thought of a new way but could get only so far in creating an open market. The result of compromise was something akin to government utilities – flag carriers serving nations and buoyed by government interventions. As discussed above, the Open Skies agreements have their faults, but if we take the EU-US Open Skies agreement as a high-water mark of liberalisation, then it took 71 years for the aviation industry to move from a public utility model to a market-based model. That makes a return to life under Chicago/Bermuda the most dystopian of prospects, yet, things appear to be moving in that direction. Alitalia has been nationalised16, Germany is considering nationalising Condor after a deal with LOT to buy the airline collapsed due to the travel restrictions17, and the EU has relaxed State Aid rules18. In addition to treating airlines like essential air services by mandating routes stay open, the US CARES Act requires that airlines exchange warrants, an equity interest or debt in their companies in order to utilise the loan program19. Likewise in Europe, EU competition chief Margrethe Vestager recently advocated for the Member States to take stakes in companies in order to block Chinese takeovers20. At the same time, voices on the left are clamouring for nationalisation as a means to chart a course for a low-carbon future21. In many States, airlines will be fully or partially government-owned, making the response look like an atavistic move back to the Chicago/Bermuda model. 16 Thomas Pallini, “Italy just took full ownership of its national airlines Alitalia to save it from collapse amid the coronavirus. Here’s the carrier’s full troubled story” Business Insider (21 March 2020) https://www.businessinsider.com/alitalia-nationalized-by-italy-history-2020-3?r=US&IR=T 17 Klaus Lauer, et al, “Exclusive: Germany ready to nationalise airline Condor – sources” Reuters (1 April 2020) https://www.reuters.com/article/us-condor-nationalisation-exclusive/exclusive-germany-ready-tonationalise-airline-condor-sources-idUSKBN21J5F9 18 Foo Yun Chee, “EU to ease state aid rules to help virus-hit companies” Reuters (17 March 2020) https://www.reuters.com/article/us-health-coronavirus-stateaid/eu-to-ease-state-aid-rules-to-help-virushit-companies-idUSKBN2141VC 19 David Hernandez, et al, “Coronavirus Aviation Industry Relief Legislation” The National Law Review (19 April 2020) https://www.natlawreview.com/article/coronavirus-aviation-industry-relief-legislation 20 Javier Espinoza, “Vestager urges stakebuilding to block Chinese takeovers” Financial Times (12 April 2020) https://www.ft.com/content/e14f24c7-e47a-4c22-8cf3-f629da62b0a7 21 Paris Marx, “Nationalize the Airlines” Jacobin (25 March 2020) https://www.jacobinmag.com/2020/03/nationalize-airline-industry-coronavirus-climate-emissions
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