The end of Furlough is looming large and unless the Government announces a major job retention scheme in the next two weeks, at the beginning of October millions of people will be given one month’s notice to ensure the Government effectively subsidises notice periods with furlough pay and employers only have to pay statutory redundancy.

I fully accept that the Government does not have bottomless coffers and support the end of a “furlough” scheme, which effectively incentives staff to stay at home. However, for sectors like travel, which have been put on hold by Covid-19 for the foreseeable future, a scheme to allow employers to keep staff on their books until a rebound is essential.

Why not take the average cost of unemployment benefit and pay it to employers as long as they also contribute to top up staff salaries? To avoid abuse and the advent of artificially subsided wages, only staff currently on furlough should be considered for such a scheme, as it needs to be about retaining jobs and not creating new cheap labour for employers.

The % amount of a salary this represents will obviously vary between employee, but it is likely to be only 60% plus for lower-paid staff. However, I know plenty of travel agents who would love the opportunity to stay in the industry during this downturn, if they could get paid a sensible amount more than sitting on the dole.  

Some staff may be able to get better-paid work elsewhere, but post-November if nothing is done, many more will remain unemployed and unproductive.

When it comes to senior staff the subsidisation maths simply does not work and many employers are now faced with a second wave or redundancies where nobody is safe.

Senior staff who seemed indispensable at the start of Covid-19 are now expensive liabilities that many businesses can no longer afford. Too many businesses have got rid of the doers and are now far to top-heavy with managers.

As an industry, we have to face that fact that “Quarantine Fear” will cause January sales to be 40-50% of last years if we are lucky and an upturn will only come, when and if, two-stage airport Covid-19 is recognised by the Government as an alternative to 14-day Quarantine.

Many businesses if they are to survive, need to go into an even deeper hibernation in order to retain enough cash to survive until an upturn hopefully comes next summer, but also plan for a scenario where it does come for a further 18 months.

Firms need to follow the example of innovators like John and Irene Hays, who have secured lucrative Government contracts to operate Covid-19 testing hotlines and track/trace calls. Those contracts may now be tied up but turning your expensive staff into part-time consultants for non-travel sectors is a possibility, particular regards IT programmers and senior customer service managers used to driving efficiency in large call centres.

Also consider noncash mergers with rivals to combine overheads and customer bases or as a last resort a “pre-packing” the business to save as many jobs as possible, if you’re facing the precipice of bankruptcy.

It’s time for tough decisions and I know from personal experience that writing a blog is a lot easier than having to take the actions required.

I can only wish all of today’s industry leaders the best of luck, during these torrid times

I remain amazed that young people, who have virtually nothing to fear from Covid-19 have allowed the older generation to disrupt their lives so greatly with Covid-19 restriction.

Firstly, we locked down the country entirely, with everybody confined to home for weeks with only essential shopping and limited exercise allowed and only gradually have we opened up restaurants, pubs and gyms, with nightclubs and Universities remaining in short term lockdown.

Away in Croatia last week, ahead of its imminent shut down I spoke to a group of 20-year olds, who seemed surprised at my questions about a youth rebellion.

One commented “Mate, why would we rebel when we’ve just had 4 months paid holiday to laze around the house. I’m back to work now, so all’s good”.

It will, however, be interesting to see if attitudes harden once Furlough ends, millions are added to the dole queue and the toughest economic recession of our life takes a grip. Unfortunately, it’s the less experienced younger workforce who are set to be hit hardest.

At the moment the government has been able to balance unpopular lockdown decisions with billions in giveaways, including CIBIL loans, rebound loans, eat out to help out schemes and tax cuts on housing stamp duty. But the “Cookie” jar is nearly empty and tougher days lay ahead.

The Travel Industry is also beginning to rebel, with holiday insurance being extended to allow travel “against FCO advice” for the first time ever to a mass-market holiday destination. Rock Insurance received numerous requests for such a product, but initially, the insurance underwriters were reluctant to go against the UK Governments clear desire to stop overseas holiday this year. However, Airlines continue to fly to destinations against FCO advice and there is clearly a need for customers to be insured.

Some OTA’s are also taking the stance that FCO’s advice is just that “Advisory” and continuing to operate holidays to destinations like the Balearics and Canaries, which statistically have lower R rates than many parts of the UK.

I understand the Governments desire to prevent the creations of a second Covid-19 spike in the UK from returning holidaymakers, but think it’s highly hypercritical to take a regional approach to lockdown measures in the UK, but insist on blanket 14-day Quarantines across the whole of Spain when the Balearics and Canaries as separate Islands clearly have Covid-19 under control.  Unfortunately, politicians don’t like admitting to having made mistakes and we will have to wait a few more weeks before the Government quietly adds these destinations back to the Green list, even though absolutely nothing will have changed.

It is the “Fear of Quarantine” that its likely to do the most damage to the UK travel industry, as I fear it will devastate forward bookings for Summer 21 in January.

If you’re a holidaymaker, why are you going to book early and take the risk that a destination will or will not be quarantined when your due to depart?

I think the best possible solution is for the Industry to implement a recognised and app certified “cross-industry” testing certificate that allows customers to leave quarantine after 5 days. This would require Airport testing, with a further test at home 4 days later. From my own investigations, it would appear that 30-minute airport testing is now available for as little as £15 per person and home testing or local pharmacy testing will shortly be rolled out. However, the scheme needs to be recognised by Government and therefore must be back by industry bodies like ABTA.

Instead of focusing on price this January, we need as an industry to focus on removing “Quarantine Fear” and providing booking flexibility that allows customers to move holiday destinations free of charge if they have any Covid-19 related fears.

Rather than wait for Government to act, we must apply self-help and move forward fast with a single industry solution that allows an effective alternative to the killer 14-day Quarantine.

Having returned from Holiday in Ibiza on Saturday morning, I feel very lucky to have avoided the Government’s illogical 14-day Quarantine imposed as a blanket measure across the whole of Spain.

Having seen the figures relating to the spike in Corona-19 cases in regions of Mainland Spain, I can understand the need to change FCO advice,  to not to fly to airports near these locations and even the need for a Quarantine period, until a less “Crude” anti-transition mechanism is put in place.

However, telling holidaymakers that it is OK to travel to the Balearics and Canary Islands under FCO advice, but then imposing a 14-day Quarantine period on return defies logic and needs to be strongly challenged by the travel Industry.

I live in Rochdale which has been on the amber lockdown warning for weeks, due to the high number of local cases but I’m still being encouraged by the Government to go to work and to “Help out by Eating out”,  even though the infection rate is higher than in my holiday location of Ibiza. Where’s the logic?

The Government also does not understand the need to keep FCO Travel advice and Quarantine rules in sync.

FCO advice not to travel to a destination instantly invalidates Travel Insurance and forces airlines and tour operators to offer customers a full refund or free change of holiday date. However, advising customers they can travel to the Balearics and Canaries, but imposing 14-day Quarantine creates a massive conflict situation between travel agents and customers.

Some customers will still want to travel, but many will argue that they cannot afford to be off work for a further 14 days after they return from their 7-day holiday and will want to cancel or change dates.

However, low-cost carriers like Ryanair with no FCO advice not to travel will continue to operate their flights as the costs of “Stop-Start Flying” are very high. This means any agent who has dynamically packaged a holiday to that destination will not be able to claim a refund or change the flight without fees, which will need to be passed onto their customers. Many customers simply want to cancel and get their money back, causing conflict and reputational damage.

Unfortunately, even Insurance policies including Covid-19 cover do not provide cancellation cover for what is termed, a “Disinclination” to travel, caused by the 14-day return home Quarantine. This leaves holidaymakers who want to cancel completely out of pocket and unhappy.

The speed of the imposition and the blanket nature of the Quarantine across the whole of Spain will do massive damage to future holiday bookings.

Why would you book in January, if a second or third wave could occur in a holiday destination leaving you out of pocket?

The only solution is for the travel industry to take control of the situation and implement the more logical “Test, Track and Trace” methodology for any customers entering the UK.

Customers could then be given a choice of a 14-day Quarantine period or the option to pay for a Corona-19 test at their arrival airport. They would then need to travel directly home to isolate, operating a full track and trace of who they meet, until they can receive their test results, which can now be delivered by email or text alert within 7 hours.

This is a much more logical and focused procedure that delivers the same results. More importantly to the travel industry, it will increase confidence to book and allow Insurance policies to be created to cover the small risk of individuals returning home with Covid-19 and needing to isolate. What insurance will not cover is the economic cost of millions of people having to Quarantine for 14-days.

The only way to fight an illogical Government is with science and logic supported by customers. Just complaining will get the industry nowhere.

The biggest impact of Covid-19 will be the post-lockdown recession we are about to enter, with large scale job losses and economic uncertainty set to hit demand hard.

Most airlines have already cut capacity by 30% next year, but with fuel prices low and aircraft on the ground, capacity could be added back.

Holiday demand will vary across age groups, with over 70s unlikely to travel anywhere in the next year and the 50-70 bracket more cautious, which will adversely impact the cruise and coach touring sectors most.

Cruise lines may be able to mothball some older ships, but any recently-launched and heavily-financed ships will need to operate, forcing a likely excess of supply over demand and amazing value for money, as cruise lines seek to entice younger clients on innovative new itineraries. Brits tend to bounce back fast when there is a bargain to be had!

Mass market beach holidays will also change, as the cost of delivering all-inclusive holidays in a socially distanced environment soar. Most Mediterranean all-inclusive hotels rely on buffet food delivery and low staff-to-guest ratios, however these costings go out the window when social distancing rules require large increases in staffing to deliver “table service” dinning.

A number of all-inclusive hotels will not open their doors this summer, even though holiday makers are now returning, as the cost of delivering the board basis sold exceeds the price it was sold at. Normality may return for summer 2021 but hotels may price cautiously until the know, forcing all-inclusive prices up.

Post Covid-19 customer demand will, naturally, move towards accommodation offering more isolation, boosting self-catering, villas and Airbnb-style private accommodationsales as customers steer away from crowded hotel pools and buffet dining.

Destination choice will be impacted massively by further Covid-19 flare ups and we are already seeing destinations and hotels moving to reassure customers with free medical insurance included as part of their holiday offering. Alternatively, destinations like Dubai are demanding evidence of Covid-19 medical insurance or personal guarantees before allowing tourists in.

The Covid-19 lockdown may boost activity and adventure holidays. Let’s face it, you’re either fatter or fitter after lockdown. Many people will have got used to taking long walks or bike rides during lock down and are likely to want more active holidays to replicate the feel-good factor this has given them.

Domestic and self-drive holidays are set to boom as cars provide sanitised travel for family bubbles. Having free access to the NHS and less distance to travel in the case of emergency will also be considerations.

How quickly parents are willing to take their children overseas again will be the key issue in January sales. If you’re transferring a summer 2020 booking you are likely to rebook early, but how many will commit early for a summer 2021 holiday with Covid-19 uncertainty still rife. The hangover of summer 2020 holidays being rebooked with no new cash or commission is going to hit profits and demand as most people are unlikely to book two holidays for summer 2021.

Traveling through airports will take longer while compulsory luggage check-in remains in place, and I’d expect airlines to increase the cost of carrying luggage and airports to charge more for “fast pass security clearance” as all seek to make more from fewer customers travelling.

Booking routes may also be impacted by Covid-19, with many retailers having lost loyal customers because of the refund log jam caused by airlines. A lot of brand damage has been done, although Travel Counsellors and On the Beach seem to have fared better than most.

Booking channels with high human interaction may do well as customers seek reassurance about what happens if Covid-19 flares up again and causing further holiday disruption. However, OTAs’ low deposits and offers of final payment two weeks before departure may counterbalance this.

If you have not decided how to implement video conference tools such as Zoom into your sales process, you’re behind the curve. Sharing online content and seeing customers’ buying signals will markedly improve conversions.

We are now at the start of the beginning.

It’s not just to the restart of holiday travel, but also a new chapter in the UK travel industry’s evolution.

The government’s announcement that wearing a face mask on all public transport is now compulsory may seem an odd thing for the UK travel trade to celebrate, but it is, in fact, a major plank in a return of holiday travel.

It effectively admits that two-metre social distancing measures are not practical in all elements of everyday life, and can be replaced with simple personal protection measures like face masks. If personal protective equipment (PPE) can effectively protect NHS staff in medical environments where there is a 100% infection rate on Covid-19 wards, it’s logical to assume similar measures can protect travellers on public transport when the average infection rate in the general population is a lot lower.

The more the public move away from blanket two-metre social distancing to using face masks as an alternative protection mechanism, the faster they will become comfortable with flying. What is the difference between a train or bus station and an airport? If you can spend one or two hours on a train, then why not a plane? In reality, aircraft are a lot safer than trains, tubes and busses, because aircraft air filtering systems create a sterile environment close to that of an operating theatre.

The move also further undermines the government’s illogical and compulsory 14-day self-isolation period imposed on all arrivals to the UK from June 8. If face masks neutralise any incremental risk of flying, then the only other potential risk is from countries with a higher “R” [reproduction] rate compared to the UK. There is no logic to thinking holidaymakers are at a greater risk on holiday than in their day-to-day environment in the UK. Countries like Spain, Greece and Portugal all have lower R levels.

I continue to think the travel industry needs to force the government’s hand via co-operation, rather than conflict. It has never been more clear that the government does not really care about the survival of the outbound travel sector, evidenced by its response to industry dismay at the financial damage the 14-day quarantine threatens.

One such collaborative move would be to make the filling out of track and trace forms and, in the future, downloading the government’s app, part of the flight booking process. If this was complemented by Covid-19 testing at airports for both arrivals and departures, then there is no way the government could resist the lifting of the quarantine.

We shouldn’t need to do all of the above to have the government lift the quarantine, but committing towards working on implementing these Covid-19 protections would massively strengthen our position with the government, as well as providing assurance to the traveling public that travel is still relatively safe, even before a Covid-19 antidote is available.

Tui CEO Fritz Joussen commented in Tui’s recent results, that the tour operator would be putting more emphasis on digitalising sales and moving them online, at the expense of its high street network, because he felt that the Covid-19 outbreak has forced shopping habits further online.

In the short term, it’s difficult to argue against this theory, as most high street shops will remain shut until 1st June 2020 at the earliest. A full lockdown of 3 months, which has forced customers to move online.

This trend is set to continue as Social distancing and restrictions, preventing customers from trying on clothes, will further damage this distribution channel. Customers may be willing to queue outside supermarkets for food, but will they be willing to enter 10-15 separate queues on a “browsing” Saturday shopping trip.

We are likely to see a growth in “Cross Channel” shopping, where customers review samples in the flesh, but ease the shopping process, by capturing a QR code and ordering their size for home delivery via their phones or even gain “Fast Pass” appointments to return later to beat queues.

However, I do feel these “natural” changes are being accelerated by imbalanced taxation structures, where “business rates” are strangling the high street. Although high street rents are reducing to reflect the balance between supply and demand, business rates continue to increase as local council’s become desperate for revenues to balance their books.

On the other hand, we hear regular reports about how internet retail giants like Google, Facebook and Amazon via clever legal structures, are paying minimal taxation in the UK as a whole and zero to local councils.

If we want to save our high streets, I propose an increase of online VAT payments to 25%, with the extra 5% being allocated to the postcodes that goods are delivered too. It would take no more than 2-3 days to create the computer programs required to “tag” sales with the postcode they are delivered to, along with the 5% Vat attributable, so that it could be paid to central government and then passed on to fund local councils.

This new VAT income, which is similar to “state sales taxes” in the USA, would allow local councils to reduce business rates and rebalance cost structures in favour of the high street.

However, do customers want to save the high street?

I believe that the high street is a key plank in the UK’s Social community, providing an opportunity for all ages to meet and spend time with friends, shopping and enjoying a coffee or in my case a quick beer.

Do we really want grate swaths of derelict town centres to spring up, because of our consumerist desire for cheaper online goods?

The answer may well be yes, but lets at least allow shops to fight on a level playing field, by counterbalancing business rates with a higher online VAT bill.

It’s a simple and deliverable idea.

The government’s 14-day self-isolation policy for returning holidaymakers has effectively put a ban on flight-based overseas holidays for summer 2020.

It has also left many travel companies with excess staff they would obviously like the government to continue supporting through furlough, as well as unused retail facilities.

The policy effectively puts travel staff in the same bracket as pubs and clubs as the last sectors to be able to return to work. There is, therefore, a strong argument for government assistance.

However, a continuation of furlough by sector is fraught with difficulties, and you can easily see some taxpayers objecting to the government continuing to pay substantial subsidies for some sectors while their staff take risks returning to work as they struggle with the economic downturn.

So how about an extension to the furlough scheme for travel in exchange for becoming a “track and trace” resource?

One radical solution, to mitigate any backlash, would be for the travel sector to take a leaf out of the wartime “Land Girls” and ask: ’What can we do for our country in the war against Covid-19?’

The travel community currently has multiple empty shops on most UK high streets. These are equipped with modern computer equipment and staff used to dealing with members of the public.

Why not re-purpose these shops and the large call centres travel business operate, into coronavirus track and trace facilities in the short-term.

In order for the government to effectively operate appointment-based testing, along with complex track and trace contact strategies, it will need to dramatically ramp up the volume of staff it has.

These staff will need to operate a brand new technology platform and to follow up automated alert-based contact with phone calls to reassure people and to make next-step arrangements. In some cases, this will just involve self-isolation. But in many, it will require testing for Covid-19.

To be 100% clear, I am not suggesting travel agency staff take frontline testing roles; this clearly carries a risk of infection and is likely to continue to be operated by medical professionals or the Army.

However, I do think the travel community does have some excess resource the Government could rent on a short-term basis, allowing travel business to retain staff while mitigating costs when travel remains on effective lockdown.

Besides asking what the government is going to do for travel, maybe we should be asking ourselves what can we do for our country?

The quicker we win the war against Covid-19, the quicker we can return to sending people on holiday and rebuilding our prosperous industry; like those who remained at home during World War Two, we may have to re-invent ourselves for a period of time.

Airlines could consolidate flights and not everyone will be raring to go, says Steve Endacott

Greece’s announcement that it is suspending its travel ban and allowing hotels to open from June 1 is obviously welcome news for the UK travel industry.

I personally expect its example to be followed by other destinations, such as Spain’s Balearics and Canaries, which will struggle to access surges in self-drive domestic markets, as they require inbound flights to deliver the volume of tourism required to support their hotel infrastructure.

We all know that social distancing simply does not work for beach holidays, as it is virtually impossible to deliver this at airports, on flights or at large buffet-style hotels.

However, the government’s need to get the UK back to work should provide the solutions we need in travel shortly as testing and tracking replaces lockdown and self-isolating as the key methods of stopping the spread of Covid-19.

Unfortunately, travellers will probably have to get used to the wearing of face masks and gloves while flying, as well as airport testing, before international ‘immunity passports’ are agreed.

In the meantime, not all destinations will open up for UK visitors and we still wait with bated breath to see if the UK government will introduce 14-day quarantine measures for returning Brits on Sunday, when the program for relaxing lockdown and back to work measures are expected to be announced.

Another key consideration is whether UK customers are ready to return to holiday travel yet.

I know I am, and if allowed I would travel on all the trips I have booked as I have paid for them and getting a refund, as we know, is problematic, to say the least. I hope customers will be equally gung-ho, but fear many will not.

EasyJet has already announced that a return to flying by lowcost carriers will be gradual and this may require flight consolidation.

Airlines currently define it as a ‘minor’ change, requiring no compensation, if a flight is changed within six hours of the original departure time. It is therefore likely that airlines will try to consolidate all passengers booked to depart on a day to a single destination, eg Majorca, onto one flight. Airlines will no longer have to refund customers once they can get one flight per day to a destination from a departure airport.

If they adopt a more brutal approach, they may try to consolidate customers from a departure region, says the North West, into one airport and cancel the other airport’s flights (for example, switch customers from Manchester to Liverpool or vice versa. This is less likely as it would represent a “significant” flight change and force the offering of a refund if the customer does not want to accept it.

The one thing that is guaranteed is that not all customers will be happy to travel because of the threat of Covid-19. Some may wish to cancel but find themselves unable to get their money back if they do so.

Logically, they can only blame the airline. But logic does not always come into it. Unfortunately, travel agents could be soon caught in the middle again, as they will be unable to cancel a holiday because the airline is offering a flight to a destination and the customer cannot claim on their travel insurance because the holiday is operating.

So, as well as some happy customers glad to be able to get away, the industry could soon be facing a second wave of Covid-19 unrest amongst its loyal customers.

Everything has changed says Rebounds Seamus Conlon and Steve Endacott

In between those moments when we are giving thanks to the NHS, or watching yet another webinar or in yet another family zoom quiz, most of us are trying to figure out what this change will mean for our industry, our ambitions, our incomes.

The key question ‘will it go back to how it was?’, for once, has a simple answer. No, it won’t.

It is unlikely that there will be any significant international leisure travel this year, with holiday travel within the UK probably a more realistic goal.

International borders are likely to remain closed to leisure travel until there is a vaccine, which is not a given, or until there are rapid testing kits that are certified by all countries.

Similarly, a lot of customers will be put off travelling because of worries about finding themselves in foreign hospitals or quarantined on cruise ships or in hotels.

Remember, these scenes are still fresh in customers’ minds.

The timing of when people can travel and feel safe doing so has a huge impact on how deep the changes to the country and our industry will be.

Governments, companies and individuals are likely to have significantly more debt and less reserves.

Governments can simply borrow more or print more money but, unfortunately, financing is much less flexible for companies and individuals.

I am optimistic that all governments will try to help their economies with stimulus and growth strategies rather than the austerity of old, but we are still going into a very bad recession no matter what.

As an industry, we should be lobbying hard to get our fair share of that stimulus and thinking how it would be best targeted.

Should the government invest in domestic tourism over outbound tourism? Should future government stimulus be targeted at carbon reducing tourism rather than reinventing old models?

As an industry, we also need to look at how coronavirus will impact how we deliver travel, sell travel and staff our travel business.

Delivering travel and social distancing

Social distancing is likely to be with us for a while, so how will that work in the practical delivery of travel?

This raises a number of questions and the prospect of many implications for all forms of travel and retailing:

• Will the middle seat on aeroplanes really be left empty? This alone could put flight costs up by 30%;
• Will airlines and hotels have to test clients for coronavirus at check-in, requiring much earlier arrivals. Will in-flight face masks be compulsory;
• Will trust accounts become the norm, given the refund civil wars;
• Will customers want private taxi transfers in resort instead of traditional coaches;
• Will all-inclusive become more popular, because it requires less mixing and availability of local restaurants;
• Will the demographics of travellers change next year with young people grabbing bargains, families hesitant and older people unable to travel;
• Will travel agencies install the Perspex glass that now encloses supermarket checkouts around consultants’ desks;
• Will this, or other measures, mean they lose out to homeworkers using Zoom to connect to clients;
• Will sunbeds in hotels and on cruise ships be separated by six feet (one can but hope!);
• Will customers use contactless cards kill the forex bureau business;
• Will you be able to get insurance for coronavirus disruption and medical cover;
• Where will the liability rest in the future if you sell a holiday and the customer contracts COVID-19 at the hotel or on a cruise ship.

I don’t think any of us really know how to deliver social distancing when travelling yet.

But I do think that travel will have to do a lot more than just telling customers to wash their hands and cough into their elbows.

And customers will want their travel provider to make the necessary changes.

The impact on selling travel

Social media and streaming services have grown exponentially, online shopping is booming, video chats and webinars are the norm and the longer we have in lockdown or extreme social distancing, the more this behaviour will be the norm, if it is not already.

Conversely, no one is visiting travel agencies, few people are buying newspapers, people are getting less direct mail, less brochures are being read.

Are consumers really going to resume these behaviours?

I personally am a huge advocate of the human consultant selling model in travel and I believe the increased use of email, video chat, Facebook and Instagram will make great consultants even more precious, but I am not sure why anyone needs to walk to a shop.

I would much prefer a Zoom appointment with a consultant.

The growth of video chat and social media, when weighed against current empty high streets, leads Rebound Consulting to predict that the likely post-coronavirus winner will be homeworking networks.

Running a travel business

Yes, it has been a long lockdown. Yes, it has been difficult at times with all of us getting re-used to living together 24/7.

Yes, I have missed the office, the routine, knowing what day of the week it is, but I do not want to go back to a daily commute and working in an office five days a week.

Working from home is possible for huge numbers of jobs and it has just been proven on an indisputable scale. The genie is out of the bottle.

Allowing your staff to work two or three days a week from home is likely to become the norm.

This will see smaller offices, new management styles and cheaper coffee/tea bills as employees drink their own.

After government-funded furloughs, travel companies will be forced to cut costs.

Will marketing and IT roles remain in house, or will companies want more flexibility and wider talent by using freelance sites like PeoplePerHour.com and Fiverr.com?

Video conferencing breaks geographical restrictions and widens the talent catchment area. Will more travel jobs become more freelance?

Adapt now to the new future, there will be no going back once the rebound comes.

Carriers have lost their ‘cloaks of invincibility’, says Steve Endacott

The UK travel industry needs a healthy airline sector to operate, so I was pleased to see that easyJet, British Airways and, hopefully soon, Virgin Atlantic have secured extra funding and look relatively safe so long as the flying lockdown does not stretch further than six months.

David Speakman, founder of Travel Counsellors, has been highly critical of the airlines and widely quoted describing them as “operating a Ponzi scheme” where they demand full payment from customers on booking and then use customer cash as they see fit.

Recent research by Bank of America seems to support this view. The bank looked at the amount of money each airline banked from un-flown flights (much of which will need to be refunded) as a percentage of how much cash it had in the bank.

As you can see from the accompanying chart, a few airlines like Ryanair had enough cash to afford refunds – irrespective of how easy they have made getting these – but many did not.

I appreciate airlines need cash up front to buy or lease capital-intensive assets like aircraft and customers benefit from this in the form of efficient new aircraft and lower prices.

Most airlines have been able to raise substantial funds to prevent collapse, showing robustness in their models – although David Speakman may rightly argue that these loans have been secured on the basis of airlines being able to access billions in unprotected consumer cash as soon as they start flying again.

So should airlines be forced to follow online travel agents and retailers in adopting trust fund models?

In that case, a customer’s cash would only be released to airlines once the customer has flown.

I’m sure airlines would argue these measures would be “draconian” given their capital intensive nature and the current financial pressure they are under.

But if agents and hoteliers aren’t allowed to use customer cash as interest-free loans why are airlines? Why should airlines be allowed use customer money before they provide the service contracted?

Ironically, in the short term the airlines’ credit card clearers are enforcing ‘quasi’ trust funds by holding on to billions of airlines’ cash as protection against the high level of credit-card recharges they are expecting on cancelled flights. So the hit on cash flow may not be as large as people think.

Ultimately, I’m in no doubt the right thing would be to force airlines to protect customers cash 100% with trust funds, but I accept this may take a number of years to deliver.

In the short term, the priority needs to be getting UK airlines flying again so they are able to deliver deferred flights or refund customers. I would not want anything that risks this.

However, in the post-corona environment regulators must accept airlines are riskier and at least level the bonding playing field.

Many airlines will have debt mountains to pay down and if they don’t operate trust fund protection they will represent a much bigger risk than trust fund operating OTAs like On the Beach and travel companies and networks such as Travel Counsellors and Trailfinders.

It is ridiculous for airlines to remain unbonded and Atol fee-free while lower-risk businesses are required to fund the replenishment of the Atol fund, which is needed as the ultimate guarantor of consumers’ money.

It is also beyond ridiculous that when the next airline fails the government will repatriate all UK citizens whether they have paid fees for repatriation or not.

It is time the CAA finally implemented its stated desire for an ‘all seats levy”.

This could be collected across all flights leaving the UK whether a customer has DIY booked a holiday via Google, using low-cost carrier sites and un-bonded bed banks like Booking.com, or has brought the same package via an OTA, homeworker or high street travel agent.

The current Atol fund is virtually empty after the Thomas Cook collapse and will be further hit via travel collapses in the next six months.

It is likely the current £2.50 per passenger fee will have to double to £5.00, but at least it will replenish much quicker if airlines also have to pay.

In the longer term, the CAA should enforce trust funds across the board or charge a hefty premium to the standard Atol fee for any company refusing to implement this basic level of protection for customer funds.

I wish all UK airlines a successful rebound, but if coronavirus has done anything it has removed their false ‘cloak of invincibility. They need to be brought into the consumer protection fold.