Menu Search through site content What are you looking for?
Menu

COVID-19 Singapore: Aviation & Tourism Considerations for the Singapore (Temporary Measures) Act

  • Market Insight 8 April 2020 8 April 2020
  • Asia Pacific

  • Coronavirus

Together with the stimulus package announced by the Singapore government on 26 March 2020 (whereby US$750 million has been pledged to support and protect the aviation sector), the temporary relief afforded by the Act should provide additional support to beleaguered aviation and tourism industries, deeply impacted by COVID-19.

COVID-19 Singapore: Aviation & Tourism Considerations for the Singapore (Temporary Measures) Act

The legislation does not expressly refer to the international carriage of passengers by air. However the definition of a tourism-related contract includes contracts for "the provision of transport…or other tourism-related goods or services for visitors to Singapore, domestic tourists or outbound tourists" and is likely to encompass:

  1. air transportation contracts such as flights for travel to and from Singapore;
  2. charter of aircraft to and from Singapore and;
  3. add-on Singapore package tours purchased together with air tickets.

Airlines are unlikely to be affected by the requirement to return deposits, as air tickets generally require full payment to confirm the booking. However, airlines will not be able to charge cancellation fees if served with a notice for relief and should ensure that global policies are amended for Singapore in-bound and out-bound flights. The prohibition against forfeiture of a deposit is more relevant to tourism and event operators providing tourism-related goods or services who will face increased demands from forfeiting non-refundable deposits. Given the nature of global business arrangements, industry event and tourism organisers may find themselves caught in a situation whereby they are not entitled to forfeit deposits but struggle to prevent forfeiture of non-refundable deposits paid to other suppliers further along its broader global supply chain

For airlines (with routes flying into and out of Singapore) currently battling unprecedented financial distress, the legislation does not address the bigger issue of the requirement to reimburse passengers for flight tickets that cannot be used, either because flights have been cancelled or due to "no-shows" as passengers either cannot or will not travel.

The expansive definition of "the provision of transport…or other tourism-related goods or services for visitors to Singapore, domestic tourists or outbound tourists" could be an issue with contracts more generally in the aviation sector, including leases.  In the leasing context, lessees of aircraft should actively engage with their lessors to negotiate and agree how the legislation sits with the "hell and high water clauses" in lease agreements requiring lessees to pay lease rents and other payments promptly irrespective of the circumstances. For lease agreements that are not subject to Singapore law, there may be a risk that foreign lessors may try to resist the lease payment moratorium afforded in the Singapore legislation and commence proceedings outside the Singapore jurisdiction.  For the lessees own protection, it remains relevant for lessees not to wholly rely on the legislation without consultation with its lessor. 

End

Stay up to date with Clyde & Co

Sign up to receive email updates straight to your inbox!