About 75 million jobs in the travel and tourism industry' are at risk: CBS News Travel Editor

Peter Greenberg, CBS News Travel Editor, joins On The Move to discuss how the travel industry has been impacted by the coronavirus outbreak.

Video Transcript

ADAM SHAPIRO: Welcome back to Yahoo Finance. There is breaking news. This all about the coronavirus.

First, NBC Universal CEO Jeff Shell says he has coronavirus.

Also, China says it will suspend the entry of foreigners into China starting Saturday. This coming from the embassy. Again, China will suspend the entry of foreigners into China starting Saturday.

We want to talk about the impact of all of this on what's happening with the airlines and with traveling. And to do that is Peter Greenberg, who is the CBS News travel editor. And Peter, I'm going to let you take this wherever you want to go, because we got the press release from United about trying to coordinate with the US government to get stranded Americans in places like Peru and other parts of South America back to the United States. We've never lived through something like this.

PETER GREENBERG: No, we haven't. And United has dropped 95% of their international routes. The only ones they're keeping open are the ones that are trying to get people back home on. But it's easier said than done.

If you go back to when Thomas Cook failed in England just a couple of months ago, the British had a program in place. It's been in place for a long time. They activated it there. It was the largest rescue attempt, and actually a successful rescue attempt, of British citizens overseas since Dunkirk. They brought back 150,000 people on regularly chartered flights. We don't have that program in place in America. It's a little bit scattered right now.

JULIA LA ROCHE: Peter, it's Julia La Roche, good to see you again. When you talk about the travel industry, it is the biggest when you think about it globally. So a lot of us travel. Obviously not right now. But what are going to be the big thematic changes that we might experience as tourist, travelers in the future? What do you think is going to be the future of the industry going forward?

PETER GREENBERG: Well, starting with the basics like a temperature check when you arrive at every airport. The beginning problems are happening now. The airlines have already announced that when they come back-- and by the way, that presumes a lot of them if they come back-- they're going to come back a lot smaller. You're going to see a lot of services denied to a lot of cities around the world.

But the first thing that's going to come back probably is going to be domestic travel in the United States, because if you go back to post-9/11, Americans were terrified about flying over a body of water to go anywhere because of terrorism. Today they're terrified about flying over a body water, because they're afraid they're going to get stuck in quarantine and can't get home. So you're going to see a lot of drive-to destinations building up. You'll see a lot of domestic travel.

The airlines that have been rumored to try to stop all their domestic travel right now are probably going to keep it in light of the fact that they're going to get bailed out. But they're going to start cutting services as well.

Think about this. Delta Airlines has parked 600 of their planes. They've parked so many of their planes they had to use-- they had to basically take over a runway at the Atlanta airport to use it just for planes that weren't going to fly anywhere. You'll see that in Victorville, California and in Tulsa, Oklahoma.

Yesterday at Kennedy, despite all the capacity cuts on Delta, their load factors were still only 31%. That's not sustainable. So it's going to be a while before they come back. You're going to lose the second, the third, and maybe even part of the fourth quarter before they can really come back.

ADAM SHAPIRO: Peter, we had the Treasury Secretary actually allude to the fact that Treasury may take an equity position in the airlines in return for some of the grants that they are seeking.

I'm curious. Bob Crandall was on with us yesterday, former CEO and chair from American. And he said, we may see or need-- he wouldn't say a reregulation of the airlines, but a return to something like that. Do you think that's legitimate?

PETER GREENBERG: I do. Right now the US Department of Transportation is essentially spineless. They haven't enacted a single decent rule in the last five years. So the problem is we have a consumer protection component that needs to come back in if we're essentially loaning the airlines all this money. The airlines are getting bailed out, but are they bailing out the passengers themselves?

Let me give you an example. Just in the Dallas area alone, just to use that as an example, 87% of the people who flew on American Airlines last year from Dallas only flew the airline one time. So these aren't frequent travelers. These are not business road warriors. These are people who saved up their hard-earned dollars to have that once a year vacation. And now they're being told by the airlines that they're going to get a voucher that lets the airline hold their money for the next year. I don't think so.

In fact, if you go to the DOT's website, it specifically states in there that if the airline cancels your flight for any reason, you are entitled to a full refund back to the original form of payment. And the airlines are not playing fair about that right now.

BRIAN CHEUNG: Hey, Peter. It's Brian Cheung here. So we talk a lot about the airlines, but I'm wondering, what are the other ripple effects to other corners of the travel industry? When we talk about hotels, for example, a very similar business model, where you have people that had these bookings originally now asking for their money back if they haven't already paid it upfront. What exactly is the consequence of all of this on that industry?

PETER GREENBERG: Well, they're hurting big time. But it's not just for individual travelers. It's meetings and conventions.

There's a reason why the New York Hilton is closed. It's closed because they make most of their money from meetings and conventions. And those book two to three years out. Well, they've all canceled. Even if they've postponed, they may not postpone for this year. It slides into next year. A lot of revenue that's missing.

And if you take a look at Marriott, 1.4 million rooms. Now, that's a lot of rooms they've got to fill. They're not filled. They're closing hotels left and right, as are their competitors.

The problem is the jobs that are being lost. You're going to lose-- forgetting the employment figures that we saw this morning, if you take a look at the travel industry alone, by the end of next week, 4.6 million jobs in this country may disappear. And of those, the hotel executives I'm talking to are telling me that only about a third of them-- excuse me-- 2/3 of them will come back. A third of them may not.

- Peter, I'm looking at your notes here on small businesses, which, of course, are the big beneficiaries, not just travelers, but also some of these big conventions and events that have been canceled. And you say that the small businesses in America will fail. It's not going to be trickle down. It's going to be tumble down. Can you talk a bit about what you're hearing in your conversations about how many of these businesses are actually going to survive on the other end?

PETER GREENBERG: Well, they're operating on small margins to begin with. They don't have six weeks to wait for the check, number one. Number two, take a look at travel agents alone. They're asking for a $7.7 billion bailout. They have no liquidity. They've been operating without a revenue stream now for a good six weeks, but they're still spending 12 hours a day doing what? Trying to get their clients the refunds we were just talking about.

So it's not just the travel agents. It's all the associated areas. It's retail. It's restaurants. It's the limo drivers. It's the Uber drivers. It's all the people that we don't think about until times like this.

To put it in a broader perspective, travel represents 1 in every 10 jobs in the world, and maybe even most importantly during normal times, 1 out of every 5 new jobs. Now, we're not talking about new jobs now. They don't exist. It's the really, the 1 out of 10 that's really going to be suffering.

So when you put that all into perspective on a global scale, we're talking about 75 million jobs in the travel and tourism industry that are currently at risk.

JULIE HYMAN: Peter, it's Julie here. Some of those jobs, of course, are also on cruise ships. And as we know, that seemed to be one of the first industries that was really hit. I would ask the same question about that, that we talked about with airlines, which is, what are some of the fundamental changes that we're going to see to cruising coming out of this? I mean, out of all of the travel subsectors, that's the one where you're most closely packed in with other people in a confined space.

PETER GREENBERG: They're going to have to redefine the way they determine insurance protection, refunds. I guarantee it's more than just whether or not the sun's going to be shining and the weather is going to be nice.

I will predict that you're going to see cruises coming back slower than normal, because if you take a look at the optics here, there are normally 365 cruise ships that sail the oceans of the world. If you look at how many of the cruise ships are really adversely affected by the coronavirus, it's about five. That's just a little bit more than 1%.

But the optics were so intense. Americans looking at that picture of the Diamond Princess being quarantined in Yokohama for two weeks. The other princess, the Grand Princess being unable to land in California for a while. So this is going to be a visual image that's not going to leave us.

So for the cruise lines to come back, they're going to have to guarantee passengers a completely liberal refund policy. No questions asked. You get 100% of your money back if you want to cancel.

And number two, they're going to have to offer some sort of an insurance guarantee. They're going to have to self-insure, I would suspect, to let people know that if there's a problem, it's not just they're going to get you home. They're going to get your money back plus plus.

ADAM SHAPIRO: You know him from CBS. He is Peter Greenberg, the CBS News travel editor. We hope you will come back here on Yahoo Finance, Peter, to keep us informed, because the travel industry is so huge.

It was Brian Cheung who actually did a scenario for us three weeks ago-- more than 17 million jobs at stake, just from travel and hospitality.

Peter Greenberg, thank you so much.