The coronavirus crisis has been hitting the charter market with unprecedented severity for weeks now. Fleet operators and agencies across the board are reporting an almost complete standstill in bookings, with many existing contracts having to be postponed or cancelled.
However, the Germans are proving to be encouragingly crisis-proof: "I've been in the charter business for 30 years now and have experienced a lot. But the way customers are reacting now is simply impressive," says Dirk Kadach, Head of Marketing at 1. Klasse Yachten in Heiligenhafen. "Almost everyone has reacted flexibly and kindly, showing understanding for our situation and rebooking instead of cancelling. Our ports on the Baltic Sea are now closed until 19 April. We are offering customers other dates this year or in 2021." The boats are ready to go at the jetty, as he shows in a YouTube video.
Nevertheless, the situation is now becoming more difficult because the season is starting at the North German bases in Mallorca and Croatia. In Spain, the authorities have extended the state of emergency and thus also the closure of the ports until 11 April - rebooking before cancelling is the trend there too. The same applies to Croatia: although the government there has not imposed an entry ban, Germans would have to go into a 14-day home quarantine after entering the country, meaning that travelling has become virtually impossible.
But in the Mediterranean, flights are of course a second problem. It is difficult to estimate whether customers will be able to get them at a later date without any problems. As soon as the crisis subsides, the travel market is likely to pick up again with considerable catch-up potential, and flights could then become a scarce commodity.
In the industry, the preference for rebooking cruises is very clear: the vast majority of fleet operators offer such rebookings, such as Pitter Yachting in Croatia, Sun Charter or VPM/Bestsail for all bases. In addition, many companies are very accommodating to customers who are still hesitant about booking a holiday: "We currently only require a 10 per cent deposit for a booking instead of the usual 30 to 50 per cent. And the final payment only has to be made two or three weeks before the start of the cruise, so that customers don't have to worry about booking in late summer or autumn," says Klaus Pitter, Managing Director and co-owner of Pitter Yachting. Each company goes its own way, customers should check the providers' websites or ask their agency.
At this point, the dilemma of charter customers becomes apparent: those who have already booked a charter are faced with the question of what to do: Rebook? Cancel? Every day, the YACHT editorial team receives questions from worried sailors: Can I cancel free of charge because there is now a worldwide travel warning from the German Foreign Office? Others enquire whether they should pay the second instalment of a charter or not. Still others are asking whether they should book a holiday later in the year or wait and see how the coronavirus crisis develops.
From a legal perspective, there is bad news for customers who have concluded a normal bareboat charter. As their contract is not governed by the very customer-friendly travel law, but almost always by the rental law (exceptions are often berth charters, flotillas or fun regattas), the new law means that they will not be able to take out a bareboat charter, Global travel warning from the Federal Foreign Office This does not automatically mean that they are entitled to reimbursement of their travelling expenses. Benyamin Tanis from the law firm Ben Tanis/von der Mosel in Kiel, who dealt with the issue on behalf of VDC, explains how tricky the situation is.
"There are basically two variants in the corona crisis. One involves the 'impossibility' of providing a service, i.e. the provision of a boat, for example because the destination country of the voyage has closed the harbours or imposed a regional quarantine. As a rule, this would amount to a refund of the payments made because the fleet operator is unable to provide its service." However, this would be different if the coronavirus crisis were to be categorised as a "cessation of the basis of business" on both sides. "Then, according to EU law, a 'balancing of interests' would have to take place. As a rule, this would also mean that both sides would not have to fulfil their obligations and payments already made would be reimbursed. However, in the event of a dispute, this must be clarified by the court at the place of the contract. However, this is usually not worthwhile due to high legal, translation and travelling costs. Of course, fleet operators abroad would also be aware of this.
The corona pandemic is a case of force majeure, which makes it legally complicated. It can be difficult to simply cancel the contract with full reimbursement of costs. Customers should take a critical look at how to proceed. The easiest way is certainly to contact the fleet operator and/or the agency and discuss postponing the date of the cruise; most companies are happy to do this at no extra cost. However, some companies, such as the French Dream Yacht Charter, reserve the right to demand the possible and usual increase in the price list as a surcharge if you postpone to 2021.
If the skipper or crew are unable to reschedule, the only option is to cancel the existing contract. If this is later than the current dates for port and travel closures in individual countries, for example in France or Spain until April, it will be expensive: "Then the cancellation rules from the terms and conditions of the charter contract apply," says Christian Zaloudek, board member of the Association of German Yacht Charter Companies (VDC). "Most contracts stipulate deadlines of four to six weeks before the start of the trip at the latest." If the charter crew cancels, the deposit or part of it is often due as a fee.
Another problem is that some fleet operators may no longer be in a position to refund all deposits so shortly before the cruise. The ships are already serviced and in the water, the berths booked and paid for, as are insurance policies and staff salaries. It may well be that many companies do not have the necessary liquidity to pay. If the crisis continues into the summer, it is possible that some companies will run into difficulties.
Many are already taking massive countermeasures, and many fleet operators are talking about short-time working or forced leave for staff. How do company owners view the uncertain future? Klaus Pitter from Pitter Yachting is quite open about this. "Of course, we would all like the season to start in June, but to be honest, I'm now expecting August. The only problem with the charter industry is that, unlike industrial companies, we can't simply make up for the loss after the slump by working extra hours or extra shifts. The weeks we lose in spring are lost."
However, the Austrian also believes he is well equipped to withstand a whole year of crisis if necessary. "Most of our ships belong to owners, so the burden of the downturn is spread across many shoulders. Only very few owners have financed their boat with high loans, most of them can withstand a longer lean period. This is of course different for pure investor companies that own all the ships." Pitter is crisis-tested; the company survived the Balkan War in the 1990s.
It is no secret that the markets in Croatia and Italy in particular are considered difficult due to the high level of competition. However, no insolvencies have been reported to date. However, they also have advantages: "I believe that when things start up again, the Croatian market will be the first to pick up again, as the easy car journey is unbeatable on the Mediterranean," says Klaus Pitter. Marc Rosendahl from Sun Charter, which has a base in Pula and elsewhere, has a similar view: "During the crisis, people have also learnt that sailing as an individual form of travel is much safer than the cruise industry, for example, where hundreds of customers had to spend weeks in forced quarantine on the ships!"
For the charter industry, the next few months are likely to be the most nerve-wracking in its history. When will the number of infections fall? When will lockdowns be lifted? When will business normalise again? Will the state help quickly and unbureaucratically with loans, tax deferrals or subsidies? In France, for example, the state is said to have suspended customers' cancellation rights in order to protect the travel industry. In Germany, too, discussions on similar steps are reportedly already underway behind the scenes. Whatever the final outcome, the next two or three months are likely to be the toughest test of their existence for many companies.
Andreas Fritsch
Editor Travel
