Published on Friday, September 25, 2020
There have been fresh calls for tailored support for the travel industry by company bosses digesting the new measures outlined yesterday by the Chancellor.
The government’s furlough replacement scheme has been given a lukewarm response by the industry, amid warnings it may not go far enough to protect travel companies and jobs.
Some bosses, including Advantage Travel Partnership Julia Lo Bue-Said said the new measures would not help companies that have already begun, or concluded, said redundancy consultations.
Kuoni CEO Derek Jones said: Support needs to be tailored to the sector. Schemes that are designed for recovering businesses simply don’t work for travel right now.”
Chancellor Rishi Sunak announced a raft of measures that will kick off in November and last for six months.
The core pillar of the fresh plan is a job support scheme that will give businesses the option of keeping employees effectively on a part-time basis, rather than making them redundant.
But beyond the extension of the VAT scheme for hospitality and tourism, calls for a travel-specific package were rejected.
ABTA chief executive Mark Tanzer said the association will reserve full judgement until details of the measures have been studied in full.
“Since the start of the pandemic we have been stressing to the Government the unique challenges the crisis has created for the UK travel industry and the toll it has taken on jobs and businesses,” he said.
“We welcome today’s announcements from the Chancellor regarding ongoing salary support and renewed business support measures, which are an important part of ABTA’s plan to Save Future Travel and support travel businesses through the difficult winter season ahead.
“ABTA will continue to urge the government to do all it can to ensure travel businesses are supported through the crisis, and that the maximum number of jobs can be retained in our industry.”
Tanzer said it was also crucial to see progress on the ‘full regionalisation of the government’s quarantine policy’, and the introduction of testing.
“Getting those measures in place as quickly as possible is vital to boost confidence in travel, and that will be critical to the survival of many travel companies,” he said. “We also believe that the Chancellor should consider an APD cut ahead of next summer to incentivise people to book their well-deserved holidays in 2021.”
Flight Centre corporate travel CEO Chris Galanty said he was disappointed by the measures.
“This is little reprieve for the travel industry – both business and leisure travel – that has been hit so hard by this pandemic,” he said. “We are disappointed that the government has not announced more targeted support for the sector. Many jobs have already been lost and, if urgent action isn’t taken, many more are likely to go.
“To get travel, and the economy moving, the government needs to agree consistent standards and transparent guidelines for travellers.
“More specifically the UK government should heed the call from airports and airlines to introduce testing on arrival – a model that is working successfully at many airports around the globe, such as Frankfurt, Amsterdam and Dubai.
“At Flight Centre we have not seen a material shift in revenue since the crisis began and as a result we announced in July that around half of Flight Centre Travel Group’s valued UK employees will be made redundant.
“This, coupled with Flight Centre retail store closures up and down the country, was devastating, which is why we need to act now in order to save more jobs, and save the travel industry.”
Julia Lo Bue-Said, CEO at Advantage Travel Partnership said the plan looks positive for staff, but not so for employers.
“Following today’s update from the Chancellor, it does look as though there are elements to the government support that will benefit employees, however it does look less attractive for businesses and raises the question of whether this will actually help prevent redundancies,” she said. “From the plans outlined, if an employee is working a third of their hours, businesses would be paying 55% of their wage for only 33% of their time, with the government then contributing another third towards their salary – which is not sustainable for businesses.
“What’s more, many firms within the travel industry will have already initiated, or completed redundancy consultations with their staff already following months of little to no revenue being generated.”
Lo Bue-Said conceded the blanket furlough scheme could not continue, but said she was disappointed the call for sector-specific support had been ignored.
She added: “In order to protect travel industry jobs in the long-term, we must be able to book and sell holidays. The only way to do that is to improve consumer confidence and we believe securing the Government’s support on testing at ports of entry would be a viable option.”
Co-founder of Not Just Travel and The Travel Franchise Steve Witt said the government’s plan needs clarification and warned it may not help the industry.
“We welcome any measures to help a financially crippled business sector and the headlines of this scheme do sound interesting,” he said. “However, as you start to go deeper it does raise many questions. Certainly at the lower end of the pay scale, where there may be more abundance of unemployed, would it actually be cheaper for a business to make an employee redundant and actually employ multiple people on a part-time basis?
“With this new scheme it would appear that in addition to the 33% of hours which we pay for and benefit from, we have to pay another 33% to not have a team member.
“Certainly in our business we need as many people working as possible to keep up with the operational demands of the business, processing refunds and changes (all non-income generating work) so we can ill-afford dead cashflow to pay for a team member to be not working.
“We will review the new policy carefully to see how we can use it to help retain as many people as possible, but we are concerned that it’s not beneficial for our sector.”
Airlines UK said: “The Jobs Support Scheme is welcome and should help to save a range of roles across the sector, but until we replace the 14-day quarantine we simply cannot recover.
“We must urgently introduce a testing regime for air passengers and rapidly create more travel corridors, including to mainland regions such as US states.
“As airlines enter what will be a brutal winter season the Government should also bring forward a targeted package of support measures – for example a 12-month APD waiver – to ensure our industry can play a vital role in the economic recovery.”
SPAA President Joanne Dooey said: “The newly announced Jobs Support Scheme is to be welcomed cautiously as it provides a better short-term solution for employees than an extension of the furlough scheme. It’s gratifying to see that the scheme is to be focused towards supporting SMEs to help stem mass job cuts in the coming weeks. It remains to be seen if this newly announced scheme will benefit business owners or merely to sustain the status quo.
“We are calling on the Scottish Government to publicly commit that all of the funds will be delivered to the businesses in Scotland.
“The Chancellor correctly uses the term ‘depressed demand’ for sectors of business. But, the travel sector is experiencing not just depressed demand, but no demand at all. The majority of travel agents have had zero income in 2020, and because of the particular financial model of the travel industry, some have had no income for longer than that. However, the sector remains eminently viable, with many viable jobs when we see a return to travel.
“The whole travel sector now needs urgent and targeted support to ensure its return to being a vital contributor to the Scottish economy.”