U.K. Kicks Off Quarantine That Will Further Slam Airlines

(Bloomberg) --

The U.K. is pressing ahead with a two-week quarantine on international arrivals, a move British Airways and others say will wipe out tourism over the crucial summer season and destroy any chance of a quick recovery from a virus-induced slump.

BA, along with EasyJet Plc and Ryanair Holdings Plc, have threatened to sue the government over the policy, which took effect Monday, saying the restrictions will be ineffective at curtailing Covid-19 while threatening thousands of jobs. The carriers fear the move will make lockdown-weary customers postpone bookings just as they add capacity.

“Even those people who would have thought about going away on holiday in July or August are now holding off from making bookings since nobody really knows how long the rules will last,” said John Strickland, director of JLS Consulting in London, who has held senior positions at BA and KLM. “Being locked down at home for two weeks after a holiday is something that a lot of people can’t really afford to do.”

With virus infection levels on the decline in most European countries, governments have been easing travel restrictions, and beaches are opening in places like Greece, Spain and Portugal. Airlines are trying to salvage the summer season when tens of millions of people generally take their vacation. The U.K. is one of the world’s top 10 tourist destinations and attracted more than 35 million visitors last year, spending more than $50 billion.

Burning Cash

The quarantine would torpedo BA’s plans to resume about 40% of its scheduled flights in July and force it to continue burning 20 million pounds ($25 million) a day, the carrier said. EasyJet is planning to resume some scheduled flights from June 15, while Ryanair plans to restart flying July 1.

London Heathrow may need to cut one-third of its 7,000 employees if the U.K. government doesn’t indicate soon when it plans to relax the quarantine rule, the airport’s chief executive officer, John Holland-Kaye, said in a CityA.M. podcast on Monday. Europe’s busiest hub has already eliminated a third of operating costs, he said.

In a “pre-action” letter to the Home Office, IAG SA, the owner of BA, wrote that the quarantine is stricter than the one applied to people infected with Covid-19, and exemptions for people living in Ireland and workers who commute from France and Germany will make it ineffective. Ryanair and EasyJet also signed the letter.

“In our view, the government has failed to identify a valid justification for the blanket nature of the regulations, more especially given the extremely severe nature of the self-isolation provisions that apply,” it said.

Second Wave

The Home Office declined to comment on the potential legal action, but Home Secretary Priti Patel defended the 14-day quarantine measure, saying it’s a key part of the U.K.’s strategy to avoid a second wave of infections that could overwhelm the health-care system and further devastate the economy.

“We all want to return to normal as quickly as possible, but this cannot be at the expense of lives,” she said in a statement.

James Slack, a spokesman for Prime Minister Boris Johnson, said he expected “the vast majority” of people to comply with the quarantine measures. Talks about so-called air bridges are ongoing, he said, referring to the idea of awarding exemptions to specific destinations with low coronavirus infection rates.

Britain has recorded 40,542 deaths, 10% of the global total, though the number of cases and fatalities is gradually declining, with 77 deaths reported on Sunday.

Airline stocks extended last week’s rally despite the start of the quarantine. IAG gained 5.6% and EasyJet rose 4.8% as of 1:28 p.m. in London, while Ryanair was little changed in Dublin.

Patel announced the quarantine plan on May 22, just as the U.K. began to ease domestic lockdown measures, and it was met with opposition from the industry and lawmakers in Johnson’s own Conservative Party, who warned it would stifle economic recovery by signaling Britain is not “open for business.”

‘Quash Quarantine’

More than 500 tourism and hospitality companies, with combined sales of 10 billion pounds, have come together under the title “Quash Quarantine” and are deciding how best to combat the rules. They are watching the airlines’ legal action “with keen interest,” according to leader George Morgan-Grenville, CEO of tour operator Red Savannah.

“What it’s going to do is untold devastation, not just to the airlines, but to British tourism, the thousands of hotels, the thousands of visitor attractions, restaurants,” Ryanair CEO Michael O’Leary said in a BBC Radio interview Monday. “We’re facing thousands of job losses because of a stupid, ineffective quarantine,”

Jacques Gounon, president of Channel Tunnel operator Getlink SE, also wrote to Johnson on Saturday to complain the U.K. had failed to consult on the new rules or give enough notice of them being introduced. They put an unreasonable bureaucratic burden on staff and could pose a “serious risk” to the U.K.-France link’s efficiency, he wrote.

Under the new rules, travelers will have to give an address where they will be self-isolating before departing for Britain and foreign nationals who refuse to say where they’ll be staying could be refused entry. Officials will conduct spot checks to ensure compliance, and can impose 1,000-pound fines on people found breaking the rules.

©2020 Bloomberg L.P.