Covid-19 came out of nowhere and the economic rebound is going to take much longer than previously anticipated. AmTrav president and co-founder Craig Fichtelberg is optimistic about the travel industry overcoming the challenge. In this guest post, he argues for an improved federal stimulus package and a consensus behind return-to-business and return-to-travel plans.
Businesses need cash to ride out this storm. The global stay-at-home lockdown crippled the hospitality industry as travel went from all-time highs to zero in a matter of weeks. Federal Reserve Chairman Jerome Powell gets it. During a Wednesday interview with Peterson Institute for International Economics, he said, “There is a growing sense that the recovery may come more slowly than we would like … and that may mean that it’s necessary for us to do more.”
Doing more should not mean another Paycheck Protection Program. That did not work for the travel industry. As the name implies, PPP was a loan designed to incentivize companies to protect employee pay by bringing workers back even if there was nothing to do. The more employees you retain, the more the loan gets forgiven.
That program would have made sense if the downturn was short and revenue drops marginal. But as the economic recovery continues to lag and travel revenue remains at record lows, the PPP loans may have done more harm than good.
A working stimulus plan needs to be different from the PPP in three ways. First, eligibility should be based on economic hardship. Companies proving their revenue dropped by more than 50 percent should be at the top of the list to receive loans. Second, the forgivable formula should be weighted more toward essential operational expenses — not solely payroll — to keep businesses afloat. And third, the non-forgivable amount of the loan needs a much longer term and deferment period. That way, as businesses rebound, they won’t be bogged down with an inordinate debt service line item.
A Real Plan That Garners Confidence
Why are we ignoring history? We have been here before. After 9/11, travelers had to be confident they could get on planes without them being hijacked or bombed. The response was purposeful. Yes, it was inconvenient to go to the airport two to three hours before your flight. It was not fun waiting in long TSA security lines. But travelers saw for themselves the additional screening. That gave them confidence to get back at it.
There also was a spirit of community back then. Flags flew outside homes and people genuinely wanted to play their part to get the economy rolling again. It was a well-choreographed, team effort. Everyone was aligned and working toward a common goal.
In contrast, the response to Covid-19 is utter chaos. There is no plan to get travel started again. Instead, it is every state, airport and airline for itself. How will we gain travelers’ confidence when every entity that should work together is operating independently?
If the United States is not going to lead us out of this, then someone needs to step up. It could be another country that sets the example or maybe an effort among multiple countries. Leaders need to assemble, collaborate, negotiate and ultimately come up with a game plan that most of us can support.
Masks, temperature checks and cleaning standards are steps in the right direction, but the entire travel chain needs to be onboard with consistent protocols. If one airline only requires masks and another requires temperature checks, travelers won’t be confident in the safety of the aviation system. There are rumblings that TSA finally will take the lead on temperature checks and major airlines sound supportive.
Those are the things we can control while we hope for a little bit of luck. Pharmaceutical companies are working around the clock to come up with medications and vaccines. This is a wild card in the equation. Good news on this front would have a huge impact on the recovery.
But we obviously cannot wait around. Travel companies are resilient. We will survive. A working stimulus and a cohesive plan will make these next few months a little easier.
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