By Michael Klein
March 30, 2020
Across the globe, different countries have responded to the coronavirus pandemic with varying degrees of urgency and with vastly contrasting success rates.
What is becoming clear, three months into the COVID-19 crisis, is that the consequences of that global response – the freeze on travel, restrictions on movement, the ubiquity of protective face masks and social distancing – will be with us for quite some time.
Perhaps, most worryingly for the Cayman Islands, the ineffectiveness of the US response has turned our closest neighbor into the new epicenter of the virus. The consequences that flow from that are still emerging, but it will be impossible for Cayman to reopen its borders, as initially planned, on 12 April.
In all likelihood, the island will remain closed to travellers for several months, if not longer. The idea of cruise ships returning to these shores any time this summer now seems fanciful.
Cayman can and has put measures in place to control its own destiny, but we remain at the mercy of global forces we cannot control.
The global response
By now, everyone has heard about ‘flattening the curve’, the term used to explain why social distancing and lockdown policies are necessary to alleviate the pressure on health services.
Measures to minimize social contact will not only reduce the total number of coronavirus cases, but more importantly, they will lower the maximum number of people who fall ill at the same time.
South Korea is a textbook example for flattening the curve in the ongoing crisis. The country had learned from its experience with H1N1 and used large-scale testing, social distancing and quarantine early on. South Korea did not enter total lockdown, but used mass testing in combination with stringent isolation of anyone with symptoms and those they had been in contact with.
If there was a case study for how not to do it, it would be the US.
US President Donald Trump first described the coronavirus pandemic as a Democratic hoax, then as a ‘Chinese virus’. He has since flip-flopped between wanting to reopen the economy by Easter and stating that if his administration keeps the death toll to 100,000, it will have done “a very good job”.
Refusing World Health Organization coronavirus tests, the US initially attempted and failed to develop its own tests, most likely losing precious time in the process.
Infection rates in the US have increased enormously in recent weeks. Only 17 days after the first 1,000 cases were reported, the US had more than 100,000 coronavirus cases. Another two days later, on 30 March, active cases in the US were almost twice as high as in Italy, the second worst-hit country in the world, and two-and-a-half times higher than in China, when that country reached its peak of the epidemic.
An end is not in sight
Coronavirus has an incubation period of five to six days. It takes several more days for any tests to be reported. Current figures therefore do not show infection numbers today but what the situation was like about two weeks ago.
This is why any lockdown or social distancing measures will not have any effect on the statistics for two or more weeks.
Trump attempted to downplay the health crisis the US would be facing when it overtook China as the country with the most coronavirus infections. He argued that the true number of cases in China is not known. Unfortunately, that applies to the US, too.
Despite the protestations of the US president, the state of New York alone has more reported cases than France and the UK combined. If New York state were a country, it would rank sixth in the world, with more than 60,000 cases and more than 1,000 COVID-19-related deaths.
When can borders reopen?
The rise of infection rates in the US poses a serious problem for Cayman. More than 80% of the tourists who come to the Cayman Islands are American. A bungled healthcare response in the US will undoubtedly prolong the time it takes until Cayman can reopen its border to visitors from the north.
This is especially the case if Cayman successfully limits community transmission of the virus in the islands. If Cayman’s approach is successful, life on the island will be able to resume as normal in a matter of weeks.
But when Cayman can reasonably let foreign visitors return is anyone’s guess. The experience in other countries shows it may well be months.
After reaching its highest number of active cases (58,016) on 17 Feb., it took China 33 days to reduce active cases to 10% of the peak figure and 40 days to reach 5% of the maximum number. Officials in China are now gradually starting to reduce lockdown measures, although schools are not scheduled to open for several weeks in hotspot regions.
But China’s experience may be more of an exception than a guideline for countries like the US.
China used rapid detection and isolation of those who showed symptoms and quarantined anyone who had been in contact with them for 14 days. Apps are used to chart the location of every known case, color-coded depending on how recently it was detected. And there is an army of enforcers tasked with detecting and isolating cases.
These methods are not available in Europe, where countries responded with strict, blanket lockdown measures.
Meanwhile, in South Korea, reported coronavirus cases peaked on 11 March at 7,382. Today, 20 days later, that figure still has not halved. Because the peak of the epidemic in South Korea was lower, and the curve is shallower, it will also take longer to lower case numbers. That is, in effect, what flattening the curve is about: not so much reducing the total number of cases but spreading it out over time.
Perhaps by the same logic, the US administration’s failure to flatten the curve could reduce coronavirus cases quicker after its peak.
Speaking at a White House press briefing on Sunday, Trump declared that “the peak in death rate” in the coronavirus pandemic “is likely to hit in two weeks”.
While the US president has been known to be overly optimistic, it is widely assumed that the most affected US states are still at least two to four weeks away from reaching the worst of the crisis. It will then take at least four to eight weeks to get case numbers down.
However, if the US healthcare crisis develops in stages across states, the timeline of the epidemic could be stretched for much longer.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, estimated in an interview with CNN that the pandemic could cause between 100,000 and 200,000 deaths in the US. So far about 2,500 people have reportedly died from COVID-19 in that country.
In the UK, which has far fewer cases than the US, the deputy chief medical officer for England, Dr. Jenny Harries, said on Sunday that lockdown restrictions could remain in place for up to six months. Lifting them too soon would risk a second wave of infection.
Professor Neil Ferguson, of Imperial College London, an epidemiologist who advises the UK government, said equally in an interview with the Sunday Times the lockdown in the UK would need to last for months.
“We’re going to have to keep these measures in place, in my view, for a significant period of time, probably until the end of May, maybe even early June. May is optimistic,” he said.
This week's review of what is not so much the week in tourism but the week in hope of tourism at some point in the future begins with some more incongruous figures. Last week in this column it was the rise that there was in tourism employment in February (pre-crisis, therefore). The honours this week go to the National Statistics Institute for having informed us that hotel overnight stays in Spain in February went up almost seven per cent compared with 2019 - to something over 17.7 million. In the Balearics there was 4.8% rise in overnight stays (535,758 in all), an 8.8% increase in the number of visitors and an average hotel occupancy of 49.3%, which was up on last year. The Balearics (Majorca, Menorca and Ibiza) have a total of 120,000 hotel rooms.
So, there was some good news, but coming to the March reality, where do we start? Extrapolating from last year's numbers, the Fundació Impulsa calculates that up to the end of May, assuming there is no tourism, there will be a fall of 11.5 million overnight stays, a loss of turnover based on hotel accommodation alone of 466.4 million euros, and a loss in the region of 2,000 million euros of tourist spending. The March-May period equates to something like a fifth of annual business.
Then we come to the bigger economic picture. The Centre for Economic Forecasting reckons that the state of emergency (or alert, call it what you prefer) will result in a 2.7% drop in Balearics GDP. The national average decrease, the centre estimates, will be 1.7%. The fall in the Balearics will be the highest in the country, with the Canaries occupying second spot with -2.1%. This decline in the Balearics would mean the economy going into the red with negative growth, which probably won't come as any great surprise.
The centre's calculation is based on a general fall in consumption. It isn't solely to do with tourism, but quite clearly tourism does provide a huge chunk of consumption. President Armengol referred the other day to the Balearics being the region of Spain worst affected by the crisis, and she meant the economic impact because of the loss of tourism. In the Balearics, tourism's direct contribution to GDP is around 45%. The Canaries have the second highest dependence on tourism - roughly 35%.
The director of Fundació Impulsa, Antoni Riera (professor of applied economics at the University of the Balearic Islands), says that calculations about the impact in the medium and long terms are virtually impossible. Right now, he puts the total loss of Balearics GDP at anything up to 3,600 million euros. He refers to what economists call a black swan in comparing the current situation with 9/11. The black swan is an unpredictable event of limited duration but with a significant economic impact. He explains that economic contraction because of 9/11 lasted ten months. With coronavirus this will be longer because of the losses being incurred.
The Exceltur alliance for tourism excellence, whose president is Meliá CEO Gabriel Escarrer, reckons that if the crisis lasts into the summer, the losses from tourism (for the country as a whole) will be 62,000 million euros. Even if there is swifter reactivation, Exceltur estimates a 40,000 million euro loss.
Tourism contributes 12.3% to national GDP, and Exceltur are questioning whether the Spanish government is taking into account the impact on total GDP of a collapse in tourism. The alliance's vice-president, José Luis Zoreda, is urging the government to put in all the financial resources necessary in order to prevent companies going under. These companies include the large ones. If they fall, the overall effect is greater because of the impact on other sectors of the economy and on employment.
When it comes to jobs, the application of ERTE temporary layoff regulations has resulted in Meliá laying off around 8,300 employees in Spain; these represent 90% of the total workforce. The remaining ten per cent will have their working weeks cut by 50%. Riu, another of Majorca's big four hotel groups, is applying ERTE to its entire workforce in the country - 5,570 people.
These layoffs are of course being made by all hotel groups and indeed by most of the regional economy.
Tour operators ready to go
Tui's CEO, Fritz Joussen, has written a letter to all employees saying that as soon as the "situation returns to normality, Tui will be ready". All "work processes" are being maintained so that activity can resume immediately, and Tui will be there "to do what we know best, which is to fulfil the dreams of millions of clients".
It has been reported that some tour operators are gearing up to go on the first of May, the date normally taken as the start of the tourism season. Flights to Majorca and the Balearics are apparently being planned for the start of May. This, it has to be said, seems especially optimistic, and it isn't necessarily a view that it is shared by Tui or Jet2. The line coming from Tui is that it would be speculation to give a date, but as Joussen has said, the tour operator is ready. Where Jet2 are concerned, operations are currently suspended at least until the end of April.
Spain's tourists leading the recovery?
As and when tourism recovery comes, there is a belief that it will be led by the national market. Inmaculada Ranera, CEO of the Christie & Co real-estate consultancy in Spain which has a particular interest in the hotel sector, suggests that the speed of recovery will depend on the impact of the crisis on the consumer economy, and the point is well made. Regardless of the lifting of restrictions, consumer spending is bound to be hit, and this includes holidays. Increased demand will occur at different speeds, according to how individual economies have been affected.
For Spanish tourists, the suggestion is that they will stay in the country, firstly for financial reasons and secondly because of anxieties regarding travel. In this regard, however, the Balearics (and the Canaries) could benefit less than other regions. Getting to the islands requires flying. On the mainland there isn't the same necessity.
The Official Airline Guide (OAG) reports that between Monday March 16th and Monday March 23rd Aruba lost 61% of its air seats, falling from 33,338 seats per week to 12,860, with a further decline of 14% to occur in the week of March 23rd.
Aruba - Total Available Air Seats
Seats by Origin Market
In the same week, between March 16th and March 23rd, the Caribbean as a whole saw a loss of 246,712 seats, a drop of 23.7%, falling from 1,039,055 seats to 792,343 with much of the loss being seats from the USA.
Unfortunately, Aruba appears to have the largest loss of seats on a percentage decline basis while the Dominican Republic lost the most seats overall, seeing a loss of 67,474 seats in that one week.
Looking forward into April the situation will get worse with further significant suspensions of service coming into effect.
Globally, Western Europe saw the biggest percentage decline in the number of seats, falling by 52.9% between March 16th and March 23rd while Upper South America saw a 42.1% drop so the Caribbean falls roughly in the middle of world regions in terms of percentage declines.
For more information go to
As of Saturday March 21 2020
As the COVID-19 pandemic widens its reach, Caribbean nations are restricting travel in order to help mitigate the spread of the virus.
In one of the strongest measures, Dominican Republic President Danilo Medina announced the island will be closing the country’s borders by land, sea and air effective Thursday, March 19, for the next 15 days. Medina has also banned local and international activities including cultural, artistic and sports events as well as entertainment venues like bars and clubs, among others.
Following the decision to close the borders, Club Med Punta Cana and Club Med Michès Playa Esmeralda said it will temporarily suspend operations from March 19 to May 1, 2020.
The Excellence Collection will also temporarily close its two resorts in the country: Excellence Punta Cana as well as Excellence El Carmen. The resorts will close beginning on Friday, March 20, with plans to reopen on June 5, 2020.
AMresorts, which operates four resorts in the Dominican Republic and one in Jamaica, among others in the Caribbean, said it made the decision to close hotels in all destinations until further notice.
Aruba, the Cayman Islands, St. Maarten and Trinidad are closed to international visitors for two to four weeks. This closures went into effect Monday, March 16.
Curacao and Guadeloupe have suspended all international flights, while Anguilla banned direct flights originating from Europe, including the United Kingdom, for the next 14 days, effective March 17.
Antigua and Barbuda are not allowing in foreign nationals who have traveled to and from China, Italy, Iran, Japan, Korea and Singapore the past 28 days.
The Bahamas will introduce expanded travel restrictions March 19. Non-residents who have traveled to the UK, Ireland and Europe within the last 20 days will be barred from entry into the country. This is in addition to restrictions already in place for China, Iran, Italy and South Korea.
The Bahamar resort complex in Nassau will close indefinitely from March 25 onwards.
The Bahamas’ Club Med Columbus Isle will close between March 21 and May 1, 2020. Club Med Caravelle in Guadeloupe and Club Med Buccaneer's Creek in Martinique are temporarily closed until March 29, 2020.
Barbados and St Kitts and Nevis have also imposed quarantines for recent travelers from most countries affected by the virus.
Cuba has closed its border for 30 days commencing Tuesday March 24th.
Jamaica announced that effective 11:59 p.m. on Saturday, March 21, 2020, and for a period of 14 days in the first instance, Jamaica’s air and seaports will be closed to incoming passenger traffic.Half Moon announced it will temporarily close March 18 to May 1, 2020. Sandals has closed all of its resorts across the Caribbean from March 30th until May 15th.
Saint Lucia has closed its borders effective March 23rd until April 5th.
BVI has closed its borders from March 22nd until April 6th.
The US Virgin Islands are closed to all visitors from March 25th until April 25th
David Jessop, Caribbean Council.
The Caribbean is about to experience a crisis of a kind that no one in the region or anywhere else in the world could have predicted.
Covid -19, the Corona Virus, which is now present across the Americas will for a while challenge the economic and social viability of nations small and large and their government’s ability to be proactive, science-led, competent, and trusted.
If the practical, public health, logistical and economic challenges now being faced in Europe or the US are examples of the difficulties governments in liberal societies are having when trying to address a fast moving epidemic of uncertain proportions, much of the Caribbean will also struggle
This is because public health requirements apart, almost every Caribbean nation will have to address at the same time, complex domestic issues including a rapid rise in unemployment particularly in the hospitality sector, the possibility that multiple businesses may go under as a consequence of illiquidity, falling government revenues, and more fundamental issues of trust in a political class who must now lead and deliver positive results in real time.
The next six months will indicate which governments have done their best, anticipated problems before they arose, have been honest and provided detailed factual information rather than hoping inaction or half-truths will somehow see them through.
A few days ago, the Inter-American Development Bank (IDB) published a first paper containing rough projections of the impact of COVID-19 on The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad. The Caribbean Development Trends paper was published as almost every nation in the region reported externally introduced cases of the virus.
What it noted was that the magnitude of impact will depend crucially on the virus’ spread, duration, and the measures that countries in the region and elsewhere undertake to insulate themselves. It also observed that the outcome will vary by the nature of a country’s dependence on tourism, especially if the global crisis extends into the 2020-21 winter high season.
The authors of the six-page document – Henry Mooney and Maria Zegarra – suggest that the five countries they reviewed will experience a shock if, as is likely, important sectors including the commodities trade, tourism, and cross border financial flows are affected.
They noted that productivity from workers falling ill or being asked to stay at home will have implications for national output, and that as the crisis deepens, the governments of the six countries reviewed will likely face increased financing needs driven by the direct cost of mitigation and falling revenues.
The two economists went on to warn that in The Bahamas, Barbados, and Jamaica, where tourism receipts account for between 34 and 48% of total output (GDP) and similarly large shares of overall employment, the effect may be severe, particularly if the crisis globally remains acute past September.
To demonstrate this, the report’s contains initial illustrative scenarios. They indicate that a long-lived high-impact crisis on tourism-driven output could result in a 75% reduction in visitors over the last three quarters of 2020 and could reduce GDP relative to the pre-crisis baseline expectations by between 11% to 26% in the case of Bahamas, and by other appreciable magnitudes for Barbados and Jamaica.
Policymakers, IDB’s economists warn, should work towards developing contingencies and identifying low-cost near-term supplemental financing options, including those available from international financial institutions. A failure to do so, they say, could have adverse implications for longer term fiscal and debt sustainability and put at risk the gains achieved over recent years.
What the IDB report indicates is that as hard as it may be for governments and industry in the Caribbean to be planning other responses in parallel to the epidemic, it is essential that economic recovery strategies are considered now.
What it does not say is that this may be unusually difficult as the region’s major international partners will be in recession, heavily indebted, and less focussed on early global economic stimulation as a result of the need to achieve renewed growth in their own economies.
This suggests that above all Caribbean recovery should focus on increasing self-sufficiency, particularly incentivizing agriculture in order for the region to be able to feed itself, incentivizing the growth of new high value services exports, and adopting a well thought through long-term tourism response aimed at ensuring global competitiveness. In particular this ought to include serious thought about removing the demand dampening fiscal inequities that disadvantage the region’s land-based hospitality sector which directly supports onshore economic growth, employment, consumer demand and government revenues.
Although the industry in the Caribbean and elsewhere is understandably preoccupied with the immediate impact of the virus, the World Travel & Tourism Council, an industry body representing some of its biggest global players, recently suggested some more general responses of relevance to the Caribbean.
Observing that global travel could be hit by a 25 per cent decline in 2020 and that between 12 and 14 per cent of industry jobs are at risk on a worldwide basis, it suggested facilitating travel by making it seamless and secure; alleviating pressure at ports and airports; reducing or removing taxes on travel including airport, port and other related taxes; and providing fiscal relief and incentives that support smaller tourism-related businesses negatively impacted by the virus.
It also proposed, in due course, that destinations and the industry increase their budgets and resources for promotion, marketing and product development, and develop stronger public-private partnerships and greater international cooperation.
When the moment comes, these are all ideas worthy of consideration as elements of a Caribbean recovery programme, as assuring competitiveness will be essential if the Caribbean is to retain its present role as a major tourism destination.
Once the corona virus has passed, it will be necessary to deliver a well-financed and thought through, sustained response. This may be hard to contemplate now but governments in conjunction with the private sector and representatives of other parts of civil society should be exchanging views online to consider what a creative long-term post corona virus economic recovery strategy might look like.
David Jessop is a consultant to the Caribbean Council and can be contacted at
More hotels announcing closure and staff lay-offs
Tourism Minister Edmund Bartlett is admitting that the entire tourism industry in Jamaica is facing imminent closure given the travel restrictions on many of its source markets as well as local containment and restriction protocols.
This admission comes as larger hotel chains and smaller hotels announce closures and the laying off of staffers. The latest hotel chain to announce that it will stop receiving guests is Decameron All-inclusive Hotels and Resorts.
The hotel chain will stop receiving guests for a period of two months, effective today March 20. While the hotel has not said it will be closing, nonetheless, it would not be fully operational since the hotel will not be receiving any visitors.
On Tuesday RIU announced that it was closing three of its properties: RIU Palace, RIU Negril and RIU Montego Bay, as of yesterday March 19. This is as a result of the pandemic forcing a reduction in visitor arrivals and decreasing demand for flights and cutting the nation's tourism projections.
Some 1,000 workers will be affected by the closures at RIU. No sooner that this announcement was made, Half- Moon also announced a temporary closure of its Montego Bay- based resort.
Hope for a short-lived closure
Speaking in an interview with the Caribbean Business Report Minister Bartlett expressed the hope that the closure of Jamaica's tourism industry will be short-lived and that the recovery programme will be quick so that normalcy can be returned at the shortest possible time.
He was quick to make the point that Jamaica is not alone in this regard as many other countries have closed down their hotel sector, anticipating a short-lived closure.
“In fact the entire world is following that position (closing markets for travel); it is proven that the optimal way to deal with the virus now is to prevent the movement of the vectors from one location to the other,” Bartlett argued.
Regional tourism response
The tourism minister remarked that a regional approach is being crafted to protect the Caribbean tourism product from COVID -19. The Caribbean Tourism Organisation (CTO) is spearheading this initiative in collaboration with regional health agencies.
Bartlett pointed out that the Caribbean Hotel and Tourist Association as well as the Global Tourism Reliance and Crisis Management Centre are also playing a role in crafting this regional tourism approach for COVID 19. He emphasized that this response approach has more to do with tourism reliance and how support can be given to the public health efforts to contain and prevent the proliferation of the COVID- 19 virus.
According to Bartlett, “It is difficult for CTO or any organisation now to look at any kind of marketing arrangements or any other operational arrangements. CTO doesn't have the capacity to provide stimulus for the sector at this time, but we certainly are advocates.”
He said CTO will play a strong advocacy role, particularly for governments of the region to support the recovery programme to “enable the entities that are the drivers of tourism in the region to continue to operate, as they can, but more also to protect their future cash flow and the position of the workers of the industry.”
As it regards Jamaica, Bartlett reported that his ministry has been working with the Ministry of Finance and the Jamaica Hotel and Tourist Association (JHTA) to institute fiscal arrangements that will help to cushion the impact of COVID-19 on workers in the sector.
Based on these new developments, discussions have been ongoing among the Ministries of Tourism and Finance and the Public Service, as well as the JHTA to iron out a plan of action to help safeguard all tourism workers over the last several weeks.
Already, the Government is implementing fiscal actions to cushion the economic impact of COVID-19. These include discussions with commercial banks for them to provide temporary cash flow support to businesses and consumers in affected sectors through deferral of principal payments, new lines of credit and other measures such as the introduction of the COVID Allocation of Resources for Employees (CARE) programme.
The CARE programme has four elements namely
Delta Air Lines will emerge as a “smaller” carrier from the coronavirus crisis warns chief financial officer Paul Jacobson as the airline prepares to wind down the majority of its schedule by April.
“We’re going to be smaller coming out of this,” he told employees during an internal webinar Thursday viewed by TPG. “Certainly quite a bit smaller than when we went into it, and we’ll have the opportunity to grow.”
Delta has slashed schedules by 70% in April and May, and is in the process of parking more than 600 of the 1,340 active aircraft it had at the end of December. The reductions are part of an effort to drastically cut costs as revenue plummets amid fears of COVID-19.
Nearly every U.S. carrier has seen demand fall off a cliff as the pandemic spreads. Delta’s reductions are the steepest of U.S. carriers to date, though nearly every other airline has moved to pare schedules and many in the industry expect even more cuts.
In 2019, nearly 811 million travelers boarded domestic flights in the U.S., according to U.S. Bureau of Transportation Statistics data via Cirium. Delta carried 175 million of those passengers, or nearly 22% of the total, second only to American Airlines.
Jacobson’s comments Thursday are among the first by a major U.S. airline executive of their expectations on the industry post-crisis. In addition to emerging as a smaller carrier, he said Delta will come out of it with a “more modern, more nimble” fleet.
Delta already plans to retire its McDonnell Douglas MD-88 and MD-90 jets, as well as some Boeing 767s, this year due to the crisis. However, more fleet changes may come depending on the length and depth of the downturn.
“I would not be surprised to see not only Delta return as a smaller airline, but also American, United and even Southwest use this as an opportunity to cull some aircraft from their fleet,” Atmosphere Research president and founder Henry Harteveldt told TPG. “The question every airline will wrestle with is ‘what is the right number.'”
The coronavirus crisis has prompted American Airlines to accelerate the retirement of its Boeing 757s and 767s. The Fort Worth, Texas-based carrier may also move up plans to pull down its Embraer E190 fleet, as well as the Airbus A330-300s it has repeatedly postponed removing.
All U.S. carriers are, or are expected to, restructure their orderbooks and slow new aircraft deliveries until demand for air travel recovers.
Airline workforces are also being pared. As of Wednesday, Delta CEO Ed Bastian said that 10,000 of the carrier’s 91,000 active employees had already taken a voluntary unpaid leave package. And on Thursday, American president Robert Isom said the carrier had added an early retirement option for staff with more than 15 years at the airline in addition to voluntary unpaid leave offer.
A smaller Delta will also mean changes to the airline’s route map. Jacobson did not comment on this directly in the webinar, though he did say the current expectation is that the recovery in demand will be “slow at first.”
“It’s a contraction to the core of the network is what it’s going to be,” Brad DiFiore, who advises airports on developing new routes as a managing director at Ailevon Pacific, said about what a smaller Delta could look like. “Secondary hubs will be more a function of the local economies, [and] I suspect that focus cities are going to get hit pretty hard.”
Delta maintains core hubs in Atlanta (ATL), Detroit (DTW), Minneapolis/St. Paul (MSP) and Salt Lake City, plus secondary — or “coastal” — hubs in Boston (BOS), Los Angeles (LAX), New York John F. Kennedy (JFK) and LaGuardia (LGA), and Seattle (SEA). It has focus cities in smaller markets, including Austin (AUS), Cincinnati (CVG), Nashville (BNA) and Raleigh/Durham (RDU).
On the international front, DiFiore expects a “significantly smaller… footprint.” Routes between Delta hubs and those of its partners abroad will likely remain but those to secondary cities — both in the U.S. and abroad — could be cut.
“A lot depends on where the coronavirus peaks and when it recovers,” he said.
For now, at least, Delta and other airlines are in survival mode, winding down schedules and cutting costs to save cash to bridge them through the duration of the crisis. Already, two U.S. regional carriers — Compass Airlines and Trans States Airlines — have said they will close their doors permanently as a result of major airlines’ reductions.
“Our 100% priority and focus is right now is making sure we get through the dark parts and see the light of day at the end,” Jacobson told employees in the webinar.
The Points Guy
Some of the world’s biggest cruise lines say they hope to resume operations in just a few weeks. But don’t count on it.
With the severity of the coronavirus outbreak growing by the day, and an increasing number of countries announcing lengthy bans on the arrival of cruise ships, the odds of cruise lines returning to anything resembling a normal schedule by April — or even May or June — are becoming increasingly small.
A recent flurry of cruise ship bans tells you all you need to know. In just the last few days:
The bans are at odds with cruise line pronouncements that they could begin sailing again as early as April 10. That’s just 23 days from now.
“Our goal is to resume operations on April 11,” Royal Caribbean says in a travel alert on its website. “We will resume service on April 10,” Carnival Cruise Line says on its website.
Such a quick rebound for cruise operations presumes the coronavirus outbreak is quickly contained around the globe, something that looks increasingly unlikely.
Already, Wall Street analysts are starting to pencil in a halt to cruise operations that lasts at least two months and, in some markets, as many as six months.
“The shutdowns are scheduled for one month, although two (at least) appears more likely,” Instinet’s Harry Curtis wrote Sunday in a research report for investors. “Returning to a full cruise schedule is dependent, as well, on the reopening of ports that are likely to remain closed through mid-summer in Italy, Spain and Canada.”
Curtis suggested cruises in some regions might not resume until the end of summer.
“While lines may resume limited operations beforehand, many of the higher margin sailings are probably 5 to 6 months off,” he wrote.
Cruise line forecasts
Most of the biggest cruise lines that have suspended operations, including Carnival, Royal Caribbean, Norwegian Cruise Line, Holland America and Celebrity Cruises, have said they hope to resume sailings on April 10 or 11.
At the time the lines announced their suspension of operations, on March 13, those dates were about 30 days out. But they’re now just over three weeks away.
A few lines have announced a longer suspension to service. Viking, Windstar Cruises, Celestyal Cruises and MSC Cruises have canceled sailings through the end of April. Princess Cruises has canceled sailings through May 11.
In some regions, it’s already almost certain cruising will not resume by those dates.
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Alaska’s cruise season in doubt
Perhaps the region where the future of cruising is most in doubt is Alaska, and that’s due to the lengthy cruise ship ban implemented by Canada. Many cruise lines rely on Canadian ports to make Alaska itineraries viable.
By law, foreign-flagged cruise ships cannot cruise in American waters without stopping at least once per voyage at a foreign port. What this means for Alaska cruising, on a practical level, is that the ships operated by Princess, Holland America, Royal Caribbean and most other big players in the region cannot cruise there unless their itineraries include at least one stop in Canada. Most big cruise lines flag their ships in foreign countries.
Only a waiver of the law, or a scheme involving “technical” stops in Canada for the affected ships that don’t involve passenger landings, would allow for continued Alaska cruises by the big lines.
Tourism officials in Alaska already have begun asking the state’s governor, Mike Dunleavy, to lobby the Trump administration to temporarily set aside the law, which is known as the Passenger Vessel Services Act and dates back to 1886. Tourism is a critical driver of the Alaska economy, accounting for one of every 10 jobs in the state.
If the tourism industry’s efforts fail, the bulk of the Alaska tourism season could be postponed until July at the earliest.
The Alaska cruise season was supposed to start in just two weeks. It’s a short, five-month-long season that accounts for a significant share of the annual revenue in such port towns as Juneau, Ketchikan and Skagway. Before the coronavirus outbreak began, Alaska had been expecting 1.44 million cruisers to visit the state in the coming five months on 606 voyages operated by 43 different ships. Their expected spending in Alaska was around $800 million.
Note that U.S.-flagged vessels, such as those operated by small-ship cruise operators UnCruise Adventures, Alaskan Dream Cruises, Lindblad Expeditions and American Cruise Lines, still will be able to operate in Alaska during the coming season. That’s assuming the U.S. government and Alaska state government allow it.
A spokesperson for the Cruise Lines International Association (CLIA), the main trade group for the cruise industry, on Tuesday told The Points Guy it did not have a statement on the Alaska situation.
An uncertain European cruise season
The peak period for Europe also is just about to begin. It typically starts around April and May and lasts through the fall. But at least the first half of the season is looking increasingly iffy as coronavirus explodes across the continent and European countries go into lockdown mode.
On Tuesday, the European Union banned nonessential travel from the rest of the world into its borders for 30 days, a measure that will restrict cruise travelers from entering 26 countries.
Some European nations already have banned cruise ship arrivals for more than 30 days. Both Estonia and Russia, for instance, have instituted bans through May 1. Both countries are common stops on cruises around the Baltic region of Europe.
Related: Travel restrictions, port closures put Europe cruise season at risk
But it’s the current explosive outbreak of coronavirus in Italy that’s likely keeping cruise executives up at night. Italian ports in Venice, Civitavecchia (the port for Rome), Naples and Livorno (the port for Florence and Pisa) are critical to a wide range of Mediterranean cruise itineraries. For now, the ports are closed to cruise ships until further notice.
On Tuesday, Italy reported 345 new coronavirus deaths, bring its total to 2,503 — a third of all deaths from coronavirus worldwide. The total was up 16% in just one day.
Italy has recorded well over 31,000 cases of the illness.
The outlook for the Caribbean
In addition to the Cayman Islands, Caribbean destinations that have closed to cruise ships for more than 30 days include Mexico. It has banned cruise ship arrivals through at least April 20.
Mexico is home to the Caribbean’s most-visited cruise port, Cozumel, as well as several other frequently visited cruise destinations. The Pacific coast of Mexico also is an important destination for cruise ships. Vessels from Los Angeles and San Diego regularly visit the western side of Mexico on “Mexican Riviera” itineraries.
A full resumption of cruises out of U.S. ports on April 10, as some lines are planning, would be a struggle with ports in Mexico still closed.
A spokesperson for CLIA on Tuesday told The Points Guy the industry hadn’t made any changes to the initial plan it announced on March 13 for a 30-day pause to cruises.
That said, at the time the plan was announced, CLIA’s president and CEO, Kelly Craighead, hinted that the suspension of cruise operations could last more than 30 days. She used the phrase “as soon as possible,” not 30 days, as the time frame for when the industry could return to normal.
“CLIA cruise line members are voluntarily and temporarily suspending operations from the U.S. as we work to address this public health crisis,” Craighead said in a statement accompanying the announcement. “This has been a challenging time, but we hope that this decision will enable us to focus on the future and a return to normal as soon as possible.”
The situation with the growing outbreak of coronavirus, and the restrictions on travel and daily life that governments are imposing to minimize its impact, is currently very fluid. Things are changing fast, and it’s hard to know what the coming months will bring. But if you’re scheduled for a cruise in the near future, or thinking of booking one, you should be prepared for a longer suspension to cruise ship operations than cruise lines currently are projecting — at least in some regions.
Would-be cruisers also should be prepared for last-minute changes, cancellations and other disruptions to cruise schedules over the coming months.
March 16, 2020 by Henry Mooney | María Alejandra Zegarra
Inter American Development Bank
The COVID-19 outbreak could have considerable implications for Caribbean citizens and their economies. The magnitude of this impact will depend crucially on the spread of the virus, the duration of the outbreak, and measures countries in the region and elsewhere undertake to insulate themselves. It will also have much to do with country economic structures—particularly tourism dependence. This post focuses on tourism as a key shock transmission channel, and considers IDB regional member countries’--i.e., The Bahamas, Barbados, Guyana, Jamaica, Suriname, and Trinidad and Tobago (referred to from here on as the “CCB” countries)--dependence on this sector, while putting forward illustrative scenarios for ranges of possible shocks to output over various horizons. While for illustration purposes only, our scenarios highlight that because of the significance of the sector for several of our countries, as well as large increases in tourism arrivals during the peak period late in the year, a prolonged crisis could have a more amplified impact on economic activity via the tourism channel than one that is contained relatively quickly.
Transmission Channels. The impact for individual economies will differ depending on the structure of the economy (e.g., tourism dependence vs. commodity exporter), and transmission channels through which the shock propagates. These can be broken into two broad categories—(i) domestic outbreak and prevention measures, and (ii) external price and demand shocks.
Crisis Duration and Seasonality: Seasonal fluctuations in tourist arrivals to the region are significant—with increases of much as 200 percent between high seasons (generally October to April) and the lower volume period (Figure 2). In this context, should the crisis remain acute past September 2020, we would expect the impacts to be considerably more severe. Shock Scenarios via the Tourism Sector. Table 1 provides illustrative shock scenarios, reflecting a range of possible impacts of the crisis on output (GDP) for our six countries. Note that these are based on estimates of both the direct and total contributions of tourism to GDP (see Figure 1, above) for each of our countries, based on data available from the World Bank / World Travel and Tourism Council. We simulate the possible impact on GDP of 3 shock magnitudes (i.e., a reduction of tourism activity by 25%, 50%, and 75%) over 3 time horizons beginning on April 1, 2020 (i.e., through end-June 2020, end-Sep. 2020, and end-Dec. 2020). Our simulations take into account historical seasonal arrival patterns for each of the shock horizons. They do not, however, take into account shocks to other sectors (e.g., merchandise or commodities trade) or second round effects. Similarly, we apply the shock to the historical contributions of tourism to GDP, which does not take into account the non-linear properties of such a shock, particularly the fact that shorter duration shocks are likely to have less severe implications for operators (e.g., hotels, restaurants, service providers, etc.) than a prolonged crisis—e.g., a short-lived shock may not require lay-offs or extended closures, or lead to major financial difficulties, whereas a prolonged shock could force operators to make more severe adjustments.
Results: While our shock scenarios (Table 1) are incomplete as they do not take all transmission channels or second round effects into account, they do highlight that the impacts of a short-lived crisis on tourism-driven output would be considerably less damaging than one that extends through the peak season beginning later in the year—particularly for countries with large seasonal variations. As noted, we apply the same shock scenarios to two variables: the direct (Table 1.1) and total (Table 1.2) contributions of tourism to each country’s overall output. At the extreme, a high-impact scenario of a 75% reduction in tourism arrivals over the last 3 quarters of the year could reduce GDP relative to the pre-crisis baseline expectation by between 11% and 26% in the case of Bahamas, and by appreciable magnitudes also for Barbados and Jamaica. Countries that are less tourism dependent would also be less affected across our range of scenarios, though other channels not simulated here could also have large impacts.
Policy Implications: Given the rapidly evolving nature of this crisis, any impact estimates are subject to considerable uncertainty. What is clear is that the spread of the virus, its implications for global financial markets, and measures being undertaken by governments around the world have grown more severe with every passing day. In this context, CCB governments are likely to face increased financing needs driven by both direct costs of crisis mitigation, and from revenue implications of the economic shock, and that policymakers should work towards developing contingencies and identifying low-cost supplemental financing options over the near term, including those available from international financial institutions. A failure to do so could have adverse implications for longer term fiscal and debt sustainability, and put at risk the hard-won gains achieved by many countries in the region over recent years.
 For example, the fall in oil prices, if sustained, represents a positive offsetting effect on net oil importers.
The coronavirus reveals the power of industry and holes in regulation.
By TANYA SNYDER
03/11/2020 07:19 PM EDT
Updated: 03/11/2020 07:23 PM EDT
The nightmare of coronavirus outbreaks on cruise ships has revealed an industry that's skirted oversight for years and used powerful allies in Washington to keep the government out of its business.
In 2013, an engine fire aboard the "Carnival Triumph" left 4,000 people adrift with no running water or power and scarce food. Just a year later, Royal Caribbean International earned the dubious distinction of breaking the record for the largest amount of people sick from a norovirus infestation — nearly 700 people. The press wrote stories, policymakers gnashed their teeth — and nothing changed because the U.S. government is largely powerless to intervene.
In essence, cruise ships are a regulatory black hole. The cruise industry is insulated by ship registrations in foreign countries and shielded by a powerful lobby with sway in tourism-dependent U.S. states like Florida.
The cruise industry disproportionately counts Americans as customers but operates primarily in international waters and avoids tough scrutiny by registering ships mostly in small Caribbean countries with little incentive to enforce international treaties. That has led to a hodgepodge of loosely enforced standards, which regulators in the U.S. won't be able to change quickly.
And when lawmakers have tried to get tougher, such as creating more requirements for cruise ships to dock at U.S. ports, the well-heeled industry pushes back hard.
Rep. Doris Matsui (D-Calif.), who has for years pressed for greater regulations on cruise ships, said the industry fought against her last bill on the issue, which was enacted in 2010. It set some new safety and security requirements for cruise ships.
“They’re very strong,” she said. “I had the most difficult time passing that first bill.“ She said the only reason she was able to get it passed is that a constituent who had been raped on a cruise ship and other cruise ship crime victims were willing to tell their stories.
After initially insisting that no restrictions were needed, in recent days the cruise industry has presented a plan to the White House to bar the elderly from cruising over coronavirus risks. But that hasn't stopped some sales managers from using dubious sales tactics — including Norwegian Cruise Lines, which reportedly encouraged sales reps to lie to potential customers with fantastical pitch lines.
"The Coronavirus can only survive in cold temperatures, so the Caribbean is a fantastic choice for your next cruise," according to a list of talking points put together by sales managers in the Miami office, according to the Miami New TImes. Norwegian did not respond to a request for comment.
Amitai Bin-Nun said that Carnival Cruise Line recently called him with a sales pitch, where the marketer tried to suggest that Carnival — whose Princess Cruises line has had at least two serious coronavirus outbreaks — hasn’t had any problems with the coronavirus.
“I said, ‘That's not true; there were two Carnival cruises with serious Covid spread, including the Royal Princess,’” Bin-Nun told POLITICO. “And she said, ‘Oh, that's international — that doesn't impact Carnival, which is domestic,' and kept saying they're taking precautions and it's all OK. It was fairly aggressive.”
Chris Chiames, chief communications officer for Carnival Cruise Line, underscored that Carnival Cruise Line and “other brands under the Carnival Corporation banner that have had guests and or crew diagnosed with COVID-19“ are “separate operations,” but that Bin-Nun “didn’t like our sales rep trying to make a nuanced case“ and that the sales rep "should have left well enough alone.”
'Flags of convenience'
Cruise lines typically register ships under so-called “flags of convenience,” in Panama, the Bahamas and other countries chosen for their low wages, cheap fees and lax regulations. The International Maritime Organization makes the international rules that govern shipping, including cruising, but it has no enforcement power. That falls to the countries where the ships are registered, to which cruise customers provide needed tourism dollars. Some popular flags of convenience, like the Bahamas, have just one person in charge of inspecting ships that dock there.
Of the industry's $45 billion impact, $24 billion was spent directly inside the United States in 2018, generating more than 172,000 jobs, according to a report by the Florida-Caribbean Cruise Association. And cruise lines spend more than $3 million a year on lobbying.
Concern about the relative lack of laws and regulations that seek to enforce order on board cruise ships crops up sporadically in Congress, usually after a high-profile disaster strikes — former Sen. John Rockefeller (D-W.Va.), then chairman of the Senate committee that oversees transportation, held several bruising hearings on problems within the cruise industry and used his bully pulpit to attempt to force changes. But once he left office, nobody with such a high profile took up the cause, and those efforts have largely lost traction.
Behind the scenes, industry lobbyists have been talking to lawmakers, including those from Florida, a state that's dependent on tourism dollars. Cruise lines and port directors met with the Florida House delegation Wednesday evening.
So far, Florida lawmakers with ports in their districts say the cruise industry has mostly been asking for information or for help getting into ports. They haven’t yet asked for any kind of financial support — but that may be next.
Rep. Frederica Wilson (D-Fla.) said she expects that the House Transportation and Infrastructure Committee, which she serves on, will put together some sort of bailout package for the cruise lines and other parts of the travel industry.
“They’re losing money hand over fist,” Wilson told POLITICO. “So we’ll be trying to find out how we can help. I’m sure they have tons of suggestions.“
But Peter DeFazio (D-Ore.), chairman of the Transportation Committee, said Tuesday that he’s not interested in bailing out the cruise industry.
“They aren't American,” he said. “They don't pay taxes in the United States of America. If they want to re-flag their ships ... and pay U.S. wages and pay U.S. taxes, then maybe."
Rep. Donna Shalala (D-Fla.), who represents the Port of Miami, said cruise lines have “absolutely not” asked for a bailout, but noted: “There are 150,000 jobs at stake.” The former HHS secretary also praised the cruise industry for its long-standing work with the public health community on infectious diseases and noted that “they’re stepping up even those” protocols.
Republican Rep. Bill Posey, who represents Port Canaveral, Fla., said the cruise lines’ concerns “are the same as everybody else.”
“Obviously they’re concerned about revenue, but they’ve all expressed that they’re concerned about their customers too,” he said. The congressman said they’ve been calling his office asking for nothing but information. “First couple messages I got from them I thought, ‘OK …’ but they just said, ‘What’s the latest, can you keep us posted?’ I said sure.”
He would be the wrong tree to bark up for government support anyway: “I don’t do bailouts.”
'Cruise lines exploit ports'
Ross Klein, interim dean and professor in the School of Social Work at St. John's College in Newfoundland, Canada, said the IMO "sets international regulations that have no standing and no enforceability. The U.S. chooses not to pass laws. They don’t want to ruffle the flags of the cruise industry.”
"Cruise lines exploit ports," said Klein, who has written several books about the cruise line industry and tracks disasters at sea on his website.
The Cruise Lines International Association, the trade group for cruising, resists the notion that regulations have no teeth.
“There are three robust layers of inspection and enforcement of international law and other requirements, including multiple and frequent scheduled and unannounced inspections in the interest of protecting passengers, crew and the environment,” said a CLIA spokesperson, noting that ships at sea are subject to IMO and International Labour Organization standards, as well as enforcement and inspection from the countries of registration. And for ships entering and departing U.S. ports, the U.S. Coast Guard, CDC and EPA set standards.
“Reporting is required across all areas of environment, safety, sanitation, etc.,” the spokesperson said. “No other form of travel provides such a high level of transparency in reporting.“
Countries where the ships dock do have some sway, giving the United States what amounts to its only point of leverage. Once a cruise ship is in a country’s territorial waters within 12 nautical miles of a port, that country has jurisdiction.
“Even if they fly under foreign flags, there’s still a way to reach them in terms of insisting on basic medical care,” said Sen. Richard Blumenthal (D-Conn.), sponsor of a bill, S. 3124 (116), aiming to prevent and address crime on cruise ships, the Senate companion to Matsui’s bill. “If they promote or advertise or do business here, the holding companies can be held responsible.”
Blumenthal and Matsui’s bills have been introduced repeatedly since 2013 but have never advanced to the Senate floor. They include some provisions to ensure adequate medical personnel on board a cruise ship, but don't deal with other issues that have emerged during the coronavirus outbreak, like disinfection regimes or quarantine protocols.
Both Blumenthal and Matsui say they want to add language to their bills to address communicable diseases.
“That’s the next step,” Matsui told POLITICO. “I believe what I’ll do now is just get into the whole thing about how they have to check for hygiene and cleanliness and have a protocol.”
“They really have to get their act together and get experts on board and have people who understand how a virus works,” she added. “They need to professionalize this whole thing.”
A Japanese infectious diseases expert who was allowed onto the Diamond Princess, where more than 600 passengers were infected with the coronavirus, released a video on YouTube blasting the “chaotic” process to try to control the spread of the disease onboard the ship, conducted by people with no background in infection control.
New research in the Journal of Travel Medicine has shown that quarantining passengers on board the ship may have caused the number of infections to balloon and that had passengers been allowed to evacuate, nearly 90 percent of the coronavirus cases could have been avoided.
Jim Hepple is an Assistant Professor at the University of Aruba and is Managing Director of Tourism Analytics.