COVID-19 and bailout policy: the case of Virgin Australia
Article
Article Title | COVID-19 and bailout policy: the case of Virgin Australia |
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ERA Journal ID | 40708 |
Article Category | Article |
Authors | Zhang, Yahua (Author) and Zhang, Anming (Author) |
Journal Title | Transport Policy |
Journal Citation | 114, pp. 174-181 |
Number of Pages | 8 |
Year | 2021 |
Publisher | Elsevier |
Place of Publication | United Kingdom |
ISSN | 0967-070X |
1879-310X | |
Digital Object Identifier (DOI) | https://doi.org/10.1016/j.tranpol.2021.09.015 |
Web Address (URL) | https://www.sciencedirect.com/science/article/pii/S0967070X21002808 |
Abstract | The impact of COVID-19 on air transport is unprecedented and some well-known airline brands may disappear as a result. Governments around the world have responded swiftly to cushion the financial impact by offering direct wage subsidies, tax relief, loans, etc. This paper explores the government’s appropriate responses to failing airlines’ bailout request by examining the case of Virgin Australia. Following the bailout policy principles established in the literature, we suggest that bankruptcy protection should be considered as the first solution to a failing carrier. A bailout decision should be guided by a set of principles and procedures, which should not be taken lightly. Our analysis also shows that the government cannot take a hands-off approach in the absence of private lenders and investors, as the costs to consumers and regional residents would be huge, at least in the short run, if the carrier could not get through the COVID-19 pandemic. A minimum level of assistance with conditions might be needed to maintain market competition. |
Keywords | COVID-19 pandemic, airline bailouts, empty core, Qantas, Virgin Australia |
ANZSRC Field of Research 2020 | 380117. Transport economics |
350901. Air transportation and freight services | |
Public Notes | File reproduced in accordance with the copyright policy of the publisher/author. |
Byline Affiliations | School of Business |
University of British Columbia, Canada | |
Institution of Origin | University of Southern Queensland |
https://research.usq.edu.au/item/q6qwq/covid-19-and-bailout-policy-the-case-of-virgin-australia
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