/Package operators could lose five billion pounds this year

Package operators could lose five billion pounds this year

Published on Monday, May 11, 2020

Package operators could lose £4.5-£5 billion this year, according to analysis by accountancy firm MHA MacIntyre Hudson.

The company says the travel industry will be ‘paralysed’ by new plans to enforce a 14-day quarantine on people coming into the UK, adding: ” June usually most profitable time of year.”

MHA Macintyre Hudson head of travel and tourism Rajeev Shaunak said confirmation of a 14-day quarantine plan for all arriving passengers into the UK strikes down any prospect of an early recovery for the travel or aviation industries.

Shaunak said: “Full details are expected this week, but it’s believed the quarantine for passengers in the UK will become effective at the end of May, usually the start of the busiest period for the UK travel industry.

“The Prime Minister also said nothing to suggest current FCO advice against all but essential travel throughout the world was likely to change any time soon. The message ‘Stay home’ has now become ‘Don’t leave the country’.

“For business and leisure travel, self-isolation for a period at least as long as a holiday itself, and in many cases twice as long, is a disaster. June is the period of the year when nearly all travel businesses aim to make sufficient profits to see them through the rest of the year.

“Forty-seven million foreign holidays are booked each year, roughly 50% protected by the statutory ATOL scheme, and the toll of this policy will be a long-term blow.

“The changes are likely to see a number of failures by operators unable to cope.

“The Air Travel Trust, the fund behind the ATOL scheme, has already been depleted badly by the collapse of Thomas Cook in 2019. Agents and operators need to prepare for a period of very little overseas travel and shore up their finances to find the best way to survive. The policy may be justified from a political and health perspective, but the consequences can’t be underestimated.

“The problems run into 2021. There are two years’ worth of demand building up. Many budding travellers, even before the notion of quarantine, didn’t expect holidays to depart before the start of the new school year in September, and delayed their plans as a result. We have already seen TUI increase the cost of holidays by around 20% next year; they say due to demand rather than price gouging.

“The summer holidays from June to September represent 70% of all overseas packages. The total value is around £7 billion a year, so package operators could lose somewhere between £4.5 and £5 billion worth of business for this year.

“At present 70-75% are rebooking rather than looking for a refund, but businesses that followed ABTA’s initial advice to issue Refund Credit Notes, dated 31 July for when they could be converted to cash, could be in major difficulties.

“The industry is of course not just dependent on the UK Government – many overseas governments have made it clear that UK residents are likely to be some of the last to be invited to return.”

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