Fifty-seven percent of small and medium-sized travel agents in the UK say they do not have the cash to survive more than three months based on current trading conditions and available Government support – and the situation in Australia could be as bad or worse.
While British travel agents face a tough time, the British Government at least allows its citizens to travel abroad (albeit to a limited number of countries), generating some income for agents. Australia (unlike any other country except North Korea) refuses to let any of its citizens or residents leave without special exemption. Travel to New Zealand is the only exception.
While trans-Tasman travel is doing very well (Air New Zealand says trans-Tasman traffic is back to 70% of pre-Covid levels while domestic traffic is back to 90%), other popular winter getaway destinations for Aussies, such as Bali and Thailand, remain off limits. So do other, more lucrative destinations in Europe, North America and farther afield, as well as cruising. This is a big blow to Australian agents.
The outlook for travel agents in Britain is grim as well. Analysis by the Association of British Travel Agents (ABTA) estimates that 195,000 people working in the UK travel industry have either lost their job or are at risk of losing their job due to the Covid-19 crisis. ABTA has reiterated calls for the UK Government to provide tailored financial support to struggling businesses, and to safely restart travel so that businesses can generate income during the northern summer.
Britain operates a ‘Coronavirus Job Retention Scheme’ under which the government will pay 70% of wages up to a maximum cap of GBP 2187.50 (about AUD 4000) for the hours an employee is on furlough (temporary leave because of special circumstances).
Employers will top up employees’ wages to make sure they receive 80% of wages (up to GBP 2500, about AUD 4600) in total for the hours the employee is on furlough. The caps are proportional to the hours not worked. The scheme will run to the end of September. To learn more about it, see here.
The travel sector across the UK employs more than 526,000 people in ordinary times, meaning that the livelihoods of more than a third (37%) of people in the industry face being wiped out.
ABTA points out that it’s not just jobs that are bearing the brunt, businesses are on the brink of financial ruin – 57% of small-to-medium-size (SME) travel agents said they would not have the cash to survive more than three months based on current trading conditions and available Government support.
ABTA says the findings show the immense pressure the travel industry is under after almost 18 months of severe restrictions which have curtailed the sector’s ability to trade. It is urging the British Government to deliver a package of tailored financial support to see the industry through to recovery, which includes extending existing furlough and self-employed income support, extending full business rates relief, and creating a new sector-specific ‘recovery grants’ regime for travel agents, tour operators, and travel management companies.
The Association says it is particularly critical that support is extended given that employer furlough contributions are due to rise at the end of the month and business rates relief will be tapered. With international travel still largely restricted, travel businesses will not have the money to cover these costs.
The British Government is expected to review the requirements for international travel on 28 June, and the industry is also awaiting the next review of the ‘traffic light list” (which grades countries according to their eligibility for Covid-safe visitation). ABTA says the traffic light system, launched last month to deliver a safe, meaningful, risk-based restart to international travel, has been a false start, which has further dented consumer confidence at a critical time.
The system is not operating as intended, with overseas travel barely open, and as a result, the industry is on the precipice of losing a second peak summer season – crucial months which represents two-thirds of travel companies’ income.
ABTA is calling on the Government to use the forthcoming review to deliver a comprehensive risk-based restart of international travel for the peak northern summer season, which includes:
- Allowing travel to reopen under the traffic light system as intended.
- Adding more countries to the green list where vaccination rates are high and infection rates are low.
- Using the watchlists to provide stability, and the island policy to differentiate the treatment of island areas from that of mainland areas.
- Capitalising on the success of the vaccine rollout by relaxing testing and quarantine requirements for fully vaccinated individuals.
Mark Tanzer, ABTA Chief Executive said:
“Travel businesses feel completely abandoned by the Government, which has consistently failed to provide adequate support for an industry which has borne the brunt of the economic fallout from the pandemic.
“People have worked tirelessly through the pandemic trying to stay afloat, taking on extra jobs, having to make long-standing, valued staff redundant, worrying about mounting debts. While we can clearly see the financial toll with jobs and businesses lost, the emotional toll of this ongoing battle, which still has no discernible end in sight, cannot be underestimated.
“Unless the Government’s strategic review of international travel on 28 June brings forth a sensible plan for travel to reopen for the summer and targeted support that recognises the catastrophic economic hit that the sector has taken, the industry will truly begin to buckle before the summer is over.”
Britain’s travel industry has taken the biggest economic hit of all sectors impacted by the pandemic, with UK Office of National Statistics figures showing revenues for travel agents and tour operators have been consistently down between 86-90% each month since February 2020. Despite this evidence, travel businesses are yet to receive any sector-specific support from the UK Government and have had limited access to more general grant support measures.
Retail travel agents were only deemed eligible for the minimum restart grants, tour operators were excluded entirely and less than half of travel companies were able to use the furlough scheme as the staff was needed for non-revenue raising activities, such as issuing refunds and managing holiday rebookings.
On Wednesday 23 June, employees and businesses from across the aviation and travel industries – airlines, airports, tour operators, travel agents, suppliers, and partners – are coming together for a Travel Day of Action (#traveldayofaction) to raise awareness of the challenges facing the travel industry.
It’s interesting to compare the UK situation with that in Australia.
Written by Peter Needham
