/ABTA and AITO call for urgent support for the industry from Government

ABTA and AITO call for urgent support for the industry from Government

Published on Monday, March 16, 2020

ABTA and AITO are calling for urgent support from the Government to help businesses through the short-term, including temporary changes to the UK Package Travel Regulations.

Without this support, ABTA believes that perfectly viable and normally successful UK travel businesses, employing tens of thousands of people, are at risk of going bankrupt.  

Because of the unique circumstances of the coronavirus pandemic, ABTA is calling for temporary changes to the PTRs at European and UK government level, with immediate effect. The existing financial protection structures and regulations were not designed to cope with a large-scale collapse of businesses.

The changes ABTA is asking for include that tour operators should not be responsible for providing refunds if these costs are not covered by the suppliers (eg the hotel or airline). Where those suppliers cannot or will not refund, there needs to be an emergency government consumer hardship fund to fulfil refund payments.

ABTA also wants the 14-day window in the regulations for refund payments to be removed and it says refund credits should be allowed as an acceptable alternative to cash refunds, with all protections carried forward as part of the refund credit.

ABTA is also calling for urgent action to enable the provision to all sizes of business of loans that the Chancellor and Bank of England announced last week with the access mechanisms for these loans made clear; a suspension of Air Passenger Duty, the saving of which to be passed onto the consumer to help the sector to recover at the earliest opportunity and immediate deferment of HMRC payments for a period of six months in order to support cash flow.

ABTA has been in direct contact throughout the crisis with senior Government ministers and has today written again to the Prime Minster and the Secretary of State at the Department for Business, Energy and Industrial Strategy (BEIS).

Mark Tanzer, ABTA’s Chief Executive said: “The evolving coronavirus situation is causing immense damage to UK travel businesses. I am calling for urgent action today by the Government to make money available to travel and tourism companies and to make temporary changes to existing package travel regulation.

“Without this action, we risk healthy travel businesses going bankrupt, thousands of job losses across the country and customers losing money.”

AITO head of commercial, Bharat Gadhoke, in conjunction with industry affairs director, Noel Josephides: “The 2018 PTR, are quite simply no longer fit for purpose.  The rules, designed to cover normal trading circumstances, cannot function in the current extreme situations in which we find ourselves.  We have no option but to add our voice to that of others in the industry to demand Government action to protect our long-established specialist businesses.

“Having to adhere to the PTRs – which require tour operators to refund consumer payments in full should the holiday company prove unable to fulfil a package – places hundreds of companies in the simply untenable position of being a lender of last resort. 

“Many of our members pay for airline and accommodation services well in advance and are extremely unlikely, in the current highly difficult trading scenario, to receive refunds from the suppliers concerned.  In this global crisis, it would be unreasonable to expect that they be required to abide by the requirements of the PTRs, which were not designed to cope with a disaster affecting every country and every destination worldwide. To do so would lead to innumerable company collapses and the loss of many thousands of jobs, which would cost the Government dear for many decades to come.

“We urgently call on Government, instead, to invest significantly in the long-term survival of SME tour operators and travel agents by altering the scope of the PTRs to enable agents and operators legally to defer planned holidays – or, at least, to refund only monies that suppliers have refunded to them, having first taken a reasonable margin to cover the initial work involved in organising the holiday.”

AITO understands that the Italian Government has already suggested an alternative to the refund requirements of the PTRs and that this scheme is being considered by other EU members in order to safeguard the survival of their own leisure travel industries.  Say Gadhoke and Josephides: “We need urgent confirmation that our own Government (a) is involved in these discussions and (b) that it recognises that speed is absolutely of the essence.”

AITO also asks the UK Government to ensure that Merchant Acquirers (whose services facilitate the use of credit and debit cards) moderate considerably the sums of monies they are beginning to hold back from some tour operators and travel agents in order to minimise their own (the Merchant Acquirers) risk

“The extent of the Merchant Acquirers’ action on this front is already having a serious and deleterious impact on the cash flow of such tour operators and travel agents”, claims the AITO team. 

AITO is keen to stress that it is not only airlines such as British Airways and easyJet, and the giant tour operators such as TUI, amongst others, that are deserving of Government support, but also the many SMEs which form the backbone of the outbound travel industry and which add creativity and fresh thinking to the million or more holidays annually that they fashion with care and know-how. 

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