COVID-19 and bailout policy: the case of Virgin Australia

Zhang, Yahua ORCID: https://orcid.org/0000-0003-1522-3402 and Zhang, Anming (2021) COVID-19 and bailout policy: the case of Virgin Australia. Transport Policy, 114. pp. 174-181. ISSN 0967-070X

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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.


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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: Submitted version deposited in accordance with the copyright policy of the publisher.
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Business (18 Jan 2021 -)
Faculty/School / Institute/Centre: Current - Faculty of Business, Education, Law and Arts - School of Business (18 Jan 2021 -)
Date Deposited: 05 Oct 2021 23:49
Last Modified: 08 Nov 2021 01:20
Uncontrolled Keywords: COVID-19 pandemic, airline bailouts, empty core, Qantas, Virgin Australia
Fields of Research (2008): 15 Commerce, Management, Tourism and Services > 1507 Transportation and Freight Services > 150701 Air Transportation and Freight Services
14 Economics > 1402 Applied Economics > 140217 Transport Economics
Fields of Research (2020): 38 ECONOMICS > 3801 Applied economics > 380117 Transport economics
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3509 Transportation, logistics and supply chains > 350901 Air transportation and freight services
Socio-Economic Objectives (2008): B Economic Development > 88 Transport > 8803 Aerospace Transport > 880302 Air Passenger Transport
Socio-Economic Objectives (2020): 27 TRANSPORT > 2701 Aerospace transport > 270102 Air passenger transport
15 ECONOMIC FRAMEWORK > 1505 Microeconomics > 150503 Industrial organisations
Identification Number or DOI: https://doi.org/10.1016/j.tranpol.2021.09.015
URI: http://eprints.usq.edu.au/id/eprint/43739

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