Coronavirus: opening travel bubbles will hurt some economies | Instant News


David Fickling is a Bloomberg opinion columnist covering commodities, as well as industrial and consumer businesses. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian. Read more reviews Follow @davidfickling on Twitter Hot sand in your toes and cool disinfectant in your eyes. Photographer: Jose Sarmento Matos / Bloomberg Photographer: Jose Sarmento Matos / Bloomberg For people stuck at home tending to their stocks of face masks and toilet paper, it’s hard to think of a simpler pleasure than the prospect of going on vacation to a sunny beach Travel bubbles – the limited openings of international borders as coronavirus transmission weakens in parts of the world – are starting to appear. The European Union last month lifted restrictions on movement in its passportless Schengen area, which has quadrupled the frequency of cross-border flights. Singapore has allowed business travel from six Chinese provinces since last month and is considering establishing a similar deal with Malaysia. Now, Deutsche Lufthansa AG, United Airlines Holdings Inc., IAG SA and American Airlines Group Inc. are researching a virus testing program between the United States and the European Union to enable the resumption of transatlantic travel. While a growing number of tourists may be willing to risk their health for the sake of a long break, the decision of governments considering this is much more complex – even setting aside the most obvious risk that a increased border crossings could contribute to the spread of the coronavirus. This is because, in most countries, international tourism is overshadowed by the scale of domestic travel, as my colleague Clara Ferreira Marques wrote about Vietnam. This is also because countries range from those whose residents spend more abroad than foreigners on inbound travel (such as China, Canada, and the UK) to those for which tourism is a net export. major, such as the United States, Thailand and Spain. Holidays in the sun Countries with tourists spending more money abroad may be more reluctant to open travel bubbles Source: World Bank, Bloomberg Opinion Calculations Over When economies collapse and unemployment rises soaring, this imbalance can become an important factor in deciding what to do. Take New Zealand and Australia, which before a recent outbreak in Melbourne appeared to have more or less eradicated Covid-19 and were heading towards opening a bubble. For New Zealand, this is obvious. International tourism is the country’s largest export sector and accounts for 8.4% of employment, with Australians accounting for 40% of visitor arrivals, as James McIntyre of Bloomberg Economics wrote in a recent note. For Australia, the calculation is much more difficult. Unlike New Zealand, the country is a net importer of tourism – in other words, Australians spend more money abroad than foreigners spend in Australia. Last year overseas spending topped receipts by around A $ 19 billion ($ 14 billion), or about 1% of gross domestic product. The more income is trapped at home and spent in hotels, restaurants and tourist attractions across the country, the easier it will be for the economy and the labor market to recover from a historic slump. These complex redistributive effects occur within economies as well as between them. For example, the airline industry is likely to benefit the most from an increase in international travel. These companies have huge spending on dual-aisle planes and flight crews who will be mostly inactive until long-haul travel resumes. But in most countries, airlines – and in particular their international arms – constitute a relatively small share of tourism employment, and which is already relatively well protected in terms of pay and employment rights. No room at the hostel Job losses in the accommodation industry in the United States have eclipsed damage to aviation Source: Bureau of Labor Statistics In the United States, the hospitality industry and of accommodation employed around four times as many people as airlines before the coronavirus hit – and the 48% decline in employment as the infection spread between March and May was around 7.5 jobs lost for everyone in aviation. Airlines tend to be heavily unionized and often brag about government interests in airports and carriers, making politicians more willing to demand their support. Singapore is a net importer of tourism and employs significantly more people in ground services than in aviation, but don’t be surprised if the government controls Singapore Airlines Ltd. and Changi Airport is pushing the city-state to open earlier than expected. later. Beyond that, there is even a diplomatic angle. Small island states such as those in the Caribbean and the Pacific and Indian Oceans are among the most tourism dependent countries on the planet and risk devastation if border lockdowns are prolonged much longer. Major sources of vacationers like US, UK, China, Japan, Australia and Taiwan could buy huge clientele by allowing their residents to visit at an early stage. These small island states represent about one-fifth of the member countries of the United Nations. As we’ve seen in areas ranging from whaling to Taiwan recognition, cultivating their favor is a popular means of geopolitical competition. These complexities likely account for the relative slow progress in transforming the travel bubbles of proposals. in reality. Right now, tourist dollars are a valuable resource that struggling economies would like to see spent at home. Your dream of a getaway as summer turns into winter may have to wait until the pandemic has passed. This column does not necessarily reflect the opinion of the editorial staff or Bloomberg LP and its owners. author of this story: David Fickling at [email protected] To contact the editor responsible for this story: Rachel Rosenthal at [email protected] Before it’s here, it’s on the Bloomberg terminal. LEARN MORE David Fickling is a Bloomberg opinion columnist covering commodities, as well as consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian. Read more opinions Follow @davidfickling on Twitter.



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