Government Bailouts of Airlines in the COVID-19 Crisis: Improving Transparency in International Air Transport

Abstract

Coronavirus disease 2019 (COVID-19) presents the airline industry with unprecedented challenges that constitute no less than an existential threat. Given airlines' importance in the economy, which includes providing connectivity, preserving jobs, and supporting related sectors, many governments have given local airlines enormous financial support since early 2020. Although it is well understood why many governments cannot allow their major airlines to shut down, the ongoing massive government bailouts can distort competition in the airline industry. This article analyzes various government bailouts of airlines in the COVID-19 crisis and discusses how these bailouts are creating a growing problem with fair competition in the international air transport market. While examining the unique regulatory framework of international air transport, the article recommends multilateral, bilateral, and unilateral rule-based approaches that can better serve economic governance of international air transport in the post-COVID-19 era. Although this article does not suggest major legal reforms, which would be too ambitious and unrealistic at this stage, transparency can be significantly improved through the recommendations provided here.