The global aviation industry has been significantly affected by the COVID-19 outbreak from the day the World Health Organization (WHO) announced it as a public health emergency of international concern on January 30.

In Indonesia, airlines have seen dramatic effects ever since including grounding numerous aircraft, shutting down pax flights especially to and from red zone areas, and even recently shifting pax flights to cargo.

ASEAN-focused law firm, ZICO Law, said the Indonesian government has already identified few industries, which has been dramatically affected by the outbreak, among others, aviation and tourism even before the country recorded its first COVID-19 case on March 2.

"The GoI has established an incentive program to boost the tourism industry by announcing an economic stimulus for airlines that eventually will be carried out by giving discounted fares for several destinations. Although details and implementation of the incentive program shall be further regulated, the airlines have rolled out discount fare programs for several domestic destinations as previously encouraged by the GoI," ZICO said in a release.  

ZICO noted that some of the regulations enacted by the Indonesian government include 

temporary suspension of commercial flights, and a financial relief effort — which includes stimulus for the heavily-impacted aviation sector.

The suspension applies for all transportation mode, and especially for air transportation, it will be starting from 24 April to 1 June 2020. An exemption, however, will be granted, among others, to cargo flights, repatriation flights, state and emergency affairs, etc.

"Although the aviation industry is one of the (if not the most) affected sector due to the COVID-19 outbreak and the GoI has introduced several incentives, the implementing regulation(s) as guideline for the aviation industry to implement the incentives is yet to be enacted," it added.

Declaration of force majeure 

ZICO Law said the Indonesian government officially declared the COVID-19 outbreak as a non-natural national disaster from April 13. It said the issuance of the decree has been intensively discussed as to whether it may be used as a ground for any contracting party to declare force majeure event, to excuse any non-performance or even a termination of contract.

However, ZICO noted that as most practitioners and scholars’ view, the decree could not be interpreted as an automatic declaration of force majeure event without revisiting the relevant contract clauses.

"To date, we are not aware of any information on the exploitation of the decree related to performance of contract in aviation industry," it added.