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Bulletin 1: Yacht chartering & the Coronavirus (Covid-19)

News / 01-04-2020 / London

On 11 March the World Health Organisation declared the “global COVID-19 outbreak a pandemic”. Almost 754,948 cases have now been reported to WHO from 203 countries [1].

Initially some yacht charter brokers were reporting an increase in charter bookings as luxury travellers turned to superyachts. It was being marketed that on board a chartered superyacht you could ‘beat the crowds’ and to limit contact with others.  Essentially you ‘pulled up the draw bridge’ and stayed contained on board.  

However now that many borders are closed and most flights grounded the chances of being able to travel to a yacht, assemble a crew and purchase provisions are very slim. Therefore the charter market will no doubt be hit hard. 

We have heard, anecdotally, that there have been some good news stories where some clients, when the outbreak first gained speed, booked a long term charter on a large yacht to ride out the ‘lockdown’ with their family. 

In order to overcome this uncertainty the Worldwide Yachting Association(MYBA) have drafted an Addendum for its members to adapt and append to either existing or future charter agreements.  The addendum seeks to protect all parties and allows the parties to discuss alternative arrangements (such as change of port of delivery or redelivery, change of cruising area or even changing the charter period to a date up 12 months later) if either party is prevented from performing its obligation by reason of the corona virus. 

It is too soon to tell what long term effects the corona virus will have on the industry as a whole. For now, it does look like it will affect charter business for this summer season, at least. Any yacht sales that were not completed prior to the lockdown will have to be postponed until travel bans are lifted. Even after the strict lockdown is lifted in Italy and France (for example) we should see some business start to move (especially if clients have private jets etc.) but we must appreciate that the lifting of travel bans does not equal that the pandemic is over. Charter business should recover but it is likely to be a slow recovery, the MYBA Addendum should then come into its own and assist in such recovery.

Also in order to prevent the further spread of the disease, a number of yacht shows have been postponed or cancelled. This includes the Singapore Yacht Show, the Dubai International Boat Show and the Palma Yacht Show.  This will, no doubt, have a negative ripple effect throughout the industry – from top to bottom.  

For now the WHO has provided some practical advice to avoid spreading and contracting the virus. Specific to seafarers, The International Maritime Health Association (IMHA) has also produced some guidelines which crew should follow.

[1] https://www.who.int/emergencie...

 

Duncan Bateson

Duncan Bateson Partner

Siobhan Silk

Siobhan Silk Senior Associate

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