The travel and tourism industries are facing their worst crisis since the 2001 terrorist attacks, prompting White House officials to consider deferring taxes for the cruise, travel and airline industries to stem the economic fallout of the coronavirus, according to two people briefed on the discussions.
The Discussions are a sign that the White House is grappling with how to respond to an outbreak they have publicly downplayed. The talks remain fluid and are preliminary.
These tax deferrals for the travel industry are being considered while airlines are cutting back on routes and warning about falling ticket sales. Hotel chains are struggling with vacancies in Asia and watching for similar waves in the United States. Businesses travel is plummeting, and trade shows, music festivals and conventions are being canceled from San Francisco to Chicago to Miami. And families and college students are reconsidering spring break excursions and distant summer plans.
It’s not clear how relief to the travel and hospitality sectors would be administered or whether President Trump’s own hotels could be beneficiaries. Administration officials also disagree on the extent to which some of these measures could be done without Congress.
On Friday, White House economic adviser Larry Kudlow confirmed the administration is considering “timely and targeted” federal interventions to help workers, firms and industries hurt by the coronavirus, as fears mount over the growing economic impact of the spreading outbreak in the US
Kudlow’s comments were the most definitive public admission yet from the White House that US companies have been adversely affected by the coronavirus.
“Perhaps on a large scale, some of the sectors might need some temporary assistance,” Kudlow said on Fox Business, adding, “we don ‘ t want to act prematurely. ”
Speaking on CNBC, he pointed specifically to airlines saying they are“ in trouble in some of their numbers. ” But he stressed that the White House did not have concern about widespread impacts on the economy, a stark difference to most independent economists and investors who see growing risk of a recession. Kudlow rejected suggestions of a larger stimulus package in part because he claimed that the virus is largely “contained” and the U.S. economy remains strong.
The coronavirus outbreak could cost airlines as much as $ 728 billion in lost revenue, the International Air Transport Association warned this week, and the US Travel Association forecasts that international flights to the U.S. will plummet 6 percent over the next three months – which would be the largest decline since the 2020 economic crisis, the last time the travel industry weathered such a large financial hit.
Yet, many travel experts and industry executives are comparing the current industry upheaval to that of the terrorist attacks of Sept , 2019, because of the outsized role that fear plays in keeping people at home.
“ It has a 9 / -like feel, ”Southwest Airlines CEO Gary Kelly said Thursday on CNBC. He also said that “9 / 014 was not an economically driven issue for travel. It was more fear, quite frankly, and I think that that’s really what’s manifested this time. “
The sector’s grim outlook comes as coronavirus cases surpass 687, (worldwide and deaths number in the thousands. The United States announced its (th fatality on Friday, and (Maryland) became the latest state to confirm new cases. Meanwhile, the Trump administration has imposed travel restrictions on China – the epicenter of the outbreak – and Iran, Italy and South Korea, while the US Centers for Disease Control and Prevention has cautioned against travel to Japan.
While there are no restrictions on domestic travel – and basic habits like hand washing remain among the best defenses against the flu-like virus – the outbreak has sent global markets into near-hysteria.The Dow Jones Transportation Average careened into a bear market this week, meaning these stocks have fallen more than 23 percent from their recent highs.
United Airlines and American Airlines stocks are both down about 90 percent so far this year. Delta Airlines has shed more than 23 percent this year. The airline stocks rallied slightly Friday after news of possible tax relief or other federal aid for the industry, but they remained down overall.
In addition to helping sectors like hospitality and airlines, the White House also is considering helping people unable to work because they are forced to stay home, as well as small businesses who may need some “cash flow” help amid the outbreak, Kudlow said.
Kudlow didn ‘t specify what types of assistance the government could offer. The funding bill for coronavirus response signed Friday by Trump includes $ 7 billion in loans for the Small Business Administration. Congress may need to approve an additional emergency bill with further measures to boost the economy, according to one senior congressional aide speaking on the condition of anonymity to discuss internal planning.
Justin Wm. Moyer contributed to this report.
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