Gamble on great getaway risks landing us in trouble
The Government may be better advised to compensate the travel industry for a lost season than risk a restart now, writes Colm McCarthy
WHEN a boxer survives a heavy blow and beats the count, it is the next punch that often ends the contest. That could be the outcome for many firms in Ireland and elsewhere in Europe if there is a renewed outbreak of Covid-19, and there have been worrying new surges of infection in Nordrhein-Westfalen in Germany, around Lisbon in Portugal and Leicester in England.
The health systems around Europe have been strengthened and will be better prepared for the second wave, but the rest of the economy is struggling to beat the count after the first knockdown.
The economic threat from a second wave was highlighted on Thursday by Carsten Spohr, the chief executive of Lufthansa, the German airline which employs 138,000 people and survives courtesy of a €9bn rescue package led by the German government.
Spohr has already warned of up to 26,000 job losses at Lufthansa and fears that a second wave would do even more damage. The €9bn rescue was designed to finance a ‘restart and recovery’ from the first wave.
The money would not last, he said, through a second wave and the consequent renewed lockdowns. All other airlines around the world would have huge problems and so would much of German business and industry.
Germany has managed the pandemic response better than any other large country in Europe, and the Lufthansa group was regarded as one of the strongest airlines before the virus struck. If Lufthansa is worried about a second wave, the entire tourism and travel industry in Europe, including Ireland, should be worried too.
A renewed outbreak would hit the entire economy, as the Central Bank pointed out in its latest quarterly bulletin. It feels there could be a rebound by 2022, but only if reopening can continue without a second outbreak. A second wave would be more severe than the first, and recovery would be further delayed to 2024, according to the Central Bank.
The threat extends beyond air travel, but access to Ireland is largely by air and the sector is especially vulnerable. Aer Lingus and Ryanair have been most vociferous, along with pubs, hotels and restaurants, in the campaign for early reopening.
Professor Tomas Ryan, of Trinity College, an expert in biochemistry and immunology, argued in the Irish Times last Thursday that opening the island to foreign travel is risky. The two biggest source markets for inbound visitors, which are Great Britain and the USA, have a significantly higher incidence of new infection than the island of Ireland.
Prof Ryan fears that inbound visitors could increase the new case count dramatically, as could Irish holidaymakers returning from the popular Mediterranean destinations. If this were to happen, the reopening of the economy would cease. His comments echo concerns expressed by government medical advisers and other academic experts.
The European Commission has come up with a scheme of preferred status for non-EU countries with acceptable infection risk and the expectation is that Ireland will free up travel, in both directions, with those on the list and with most countries in the EU.
This regime would sit alongside the common travel area with the UK, which might not make a list drawn up by virologists in the light of recent experience with new case rates there. The USA has not made the EU list at all — the first wave has not been contained in the southern and western states.
If a fresh outbreak would bring severe economic damage, bearing in mind that many businesses have been weakened already, the narrative from lobby groups that early reopening lowers the economic cost of the virus response may be untrue.
Saving livelihoods requires the same policies that save lives if Prof Ryan is correct and the tourism and travel industries are trading their longer-term prospects for a temporary injection of cash for a few summer months. The longer-term prospects of firms in all other sectors are on the line too.
The dilemma for politicians is acute. There is real distress in the travel and hospitality sectors, and tourism is highly seasonal. If the opening up of holiday travel is foregone for this year, many operators will go bust. An initiative from Carsten Spohr’s own airline announced earlier last week could be particularly relevant to the choices available in Ireland. Lufthansa announced the commencement of on-the-spot covid-testing at its hub in Frankfurt and intends to make the service available at Munich too.
The diagnostic testing company Centogene announced last Tuesday that “it has partnered exclusively with Lufthansa and with Fraport, the operator of Frankfurt Airport, to offer Covid-19 testing to passengers flying to and from Frankfurt Airport”, and continued: “Passengers flying to or from Frankfurt Airport with Lufthansa will be able to perform the test at a sampling centre conveniently located near the main terminal. This can either be completed the day before traveling or with a fast-track solution the same day before departure. All results are delivered to the passenger via a secure digital platform and connected to their ticket — providing secured clearance for passengers flying to countries with entrance restrictions.
“Additionally, passengers can opt into an ID confirmation service, assuring authorities that the passengers’ identities correspond with the test results.”
The Centogene solution claims to obviate the need for quarantine restrictions in both directions and the need to police the voluntary self-isolation of arriving tourists and returning holidaymakers, which is what worries the public health professionals.
It would need to be implemented at all airports and ferry terminals on the island open for passenger traffic and the logistics are not straightforward. But if it can be done for the biggest operator at Frankfurt, it should be feasible at Dublin, Ireland’s largest airport by far but less than half the scale of Lufthansa’s main hub.
The unrestricted opening of air travel in and out of Ireland as envisaged looks like a gamble. If it is too late for the airport testing solutions being implemented at Frankfurt and already in place at several other airports including Reykjavik, the practical alternative is to compensate the travel and hotel industries for a lost season.
The costly measures introduced here by the Government to date, such as the wage subsidy scheme and the forbearance from tax authorities, have been available to all economic sectors.
It needs to be acknowledged that some sectors are uniquely exposed. If the concerns of Prof Ryan about the travel gamble, shared, it would appear by the Department of Health’s own experts, are to be heeded, the upcoming July measures will need to include special help for airlines, hotels and others on whom continued restrictions would bear most heavily.