The travel industry has been the hardest hit of all - how will it recover after lockdown?

As part of a new series, Business Rescue Expert is going to be looking at individual sectors and businesses that have been affected by the coronavirus pandemic. 

 

We’ll look at how they’re managing and adapting to the new set of economic circumstances and look at how they will emerge from the lockdown and hope to flourish afterwards. 

 

In the final part of the series we look at how the travel industry has dealt with this existential threat.


How will the travel industry recover after lockdown is lifted?

Flybe

 

 

 

 

 

 

It’s a tough decision but the travel sector could legitimately claim to have been the hardest hit in the coronavirus pandemic and subsequent lockdown.

 

Airlines, cruise ships, tour operators and travel agents have all seen a cessation of business on one side and an angry, frightened and demanding customer base on the other. 

 

Each has suffered generally from the overall lockdown but they have all also had to face their own specific difficulties and challenges too.   

 

Airlines

 

The airline industry has received so much bad news, so quickly that if you were playing one of the popular video games that allow you to simulate running your own airline, you’d turn it off assuming it was cheating to deliberately derail you. 

 

The coronavirus pandemic has been nothing short of catastrophic for aviation. 

 

More than 90% of all global flights have been grounded; millions of potential and actual customers business and holiday flights have been postponed or canceled; 13 carriers have already gone into administration worldwide including FlyBe in the UK with several more facing bankruptcy and thousands of staff have lost their jobs through redundancy. 

 

British Airways Chief Executive Willie Walsh had previously welcomed government support and while they have furloughed thousands more workers he fears that the existing support doesn’t recognise: “the reality of a structurally changed airline industry in a severely weakened global economy.” 

 

Possible relief in the short term with the promise of lockdown restrictions lifting to allow international travel were immediately tempered by the announcement that international arrivals into the UK will have to self-quarantine for 14 days from June 8th.

 

Karen Dee, chief executive of the Airport Operators Association said: “We’re disappointed that the government has decided to go ahead with a simplistic, blanket approach to quarantine all arrivals, without any consultation with industry.

 

“As our neighbours and key trading partners move towards a science-led, risk-based approach, the UK should do so as soon as possible or risk being left behind. Industry proposals such as “air bridges” would facilitate travel from low-risk countries and protect the public from high-risk arrivals. 

 

“This would enable the restart of aviation and support the UK’s economic recovery. Crucially, this would give us time to get a testing regime in place for arriving passengers like Greece, Iceland and other countries are doing.” 

 

An air bridge is an industry-led idea that supports relaxing quarantine regulations on travellers arriving from countries where the pandemic is under control and already has a rigorous tracking and testing system in operation. 

 

It’s not just airlines that are vulnerable – the knock-on effects will be felt across the whole interconnected supply chain. An example is the town of Crawley near Gatwick Airport in Sussex.  

 

An estimated 53,000 jobs in the town, more than half of the 94,000 positions, are either in or dependent on the aviation industry. 

 

The airline industry will also have to take into account future lower capacity on flights to allow for social distancing and other measures in airports which might put off potential travellers who are already unenthusiastic about the security and travel restrictions placed on the industry in recent years.

 

People look back on the jet set era of the 1950s as a lost golden age of aviation – we might look back on the past decade with the same nostalgia soon too.  

 

Cruises

 

While the airline industry continues to operate at 5% capacity, the cruise industry has all but sunk without trace. 

 

No cruise ships are operating anywhere in the world presently which is placing undue pressure on the UK’s two main cruise operators – P&O Cruises and Cunard. 

 

Like the airline industry, their staff are facing a bleak present of furloughs and possible future redundancies. 

 

Even when restrictions are lifted, the idea of spending 14 days in a closely confined space with other passengers from all over the world might not be as romantic or enticing a proposition as it was merely months ago. 

 

More damaging still may be the footage and memory of fully loaded cruise ships anchored within sight of land but being refused permission to dock and disembark their sick passengers. 

 

Many potential customers will weigh up probabilities of a second global wave of COVID-19 infections and if authorities would be prepared to treat cruise ships any differently next time.   

 

Tour Operators

 

Even primarily domestic travel operators are not immune to the effects of a countrywide lockdown. 

 

The Specialist Leisure Group went into administration last week with over 2,400 redundancies. 

 

The group owned such household UK travel brands such as Wallace Arnold, Shearings, National Holidays and The Bay and Coast & Country hotel chains. 

 

The end of the UK lockdown may be in sight for the summer season and customers who might have been more inclined to take a short break or an escorted tour in the UK than fly or cruise if those options were available to them – it wasn’t enough for the company to survive in the short term. 

 

Travel Agents

 

The travel industry itself was already feeling the squeeze with big names such as Thomas Cook disappearing from the high street and internet before anyone had even heard the word coronavirus. 

 

Now they face a balancing act between trying to reopen and facilitate later holidays from a wary customer base and reimbursing customers who’ve already paid for holidays that cannot take place. 

 

ABTA Chief Executive Mark Tanzer laid out the issue starkly when he appeared before Parliament’s Transport Select Committee. He said: “Businesses which have been running for 20 or 30 years are on the verge of closing down. 

 

“People are working 18 hour days to try to keep thousands of jobs. I’m very fearful and the recovery won’t be for a long time.”

 

His main demand refers to a 14-day window for refund claims to be processed by travel agents. 

 

He explained: “When the government advised against all travel in mid-March, it triggered a total shutdown and meant refunds had to be paid. One of the things that made this difficult for tour operators to refund customers was that the money hasn’t come back to them from the airlines.

 

“Our estimate for owed payments to customers is £4.5 billion. These numbers are not small, they will knock over a lot of travel companies. If people lose confidence in refund credit notes and there’s a drive for cash, you’ll see a lot of travel companies fail.”

 

He asked that the government intervene by either temporarily abandoning the 14-day refund window or to intervene directly so they would supply the money for the refund and the company then has longer to repay it back to the government. 

 

Under more normal circumstances it would be easy to have sympathy with travel agents who are increasingly stuck between the customer and the airlines or other travel providers but customers who may be relying on refunds will strongly point out that you can’t eat credit notes. 

 

If you were to take an overview of the UK travel industry right now, you might feel like a wartime general surveying a bombed city – devastation in every direction you look. 

 

Ultimately, the means and desire to travel will return but what will the landscape look like then for providers?

 

The focus of companies in the travel industry will now be concentrated on survival and ensuring they will be around to take advantage of returning demand. 

 

This is where we can help right now. 

 

Arranging a free, initial virtual consultation with one of our expert advisors is only the first step on an important and necessary journey.

 

We can then examine what immediate threats are facing your company and what opportunities can be seized to offset them and used to bolster the business in an unprecedented trading environment. 

 

Home is where the heart is but travel broadens the mind and have spent most of the past ten weeks at home – most people would be happy for the chance to stretch their wings again – but you’ve got to be around to help them.

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