Steve Endacott considers prospects for the remaining summer, winter and beyond
A quick glance at Skyscanner shows flight prices at all-time lows for August 21, with Ryanair offering one-way flights to Ibiza from £8 per person.
Although travel is beginning to open up again, demand is clearly lagging behind supply as customers remain confused by Covid-19 travel regulations which seem to change on a weekly basis.
Covid-19 testing is straightforward but remains expensive and a hassle. The government continues to refuse to allow UK travellers to use the extensive state testing facilities, forcing them to go to overpriced and inconvenient private suppliers.
As an industry we need to challenge this illogical position ASAP if we really want demand to pick up.
Quarantine appeared to be simplified by the introduction of the double-jab rule which effectively brought amber destinations to the same level as green, requiring just a lateral flow test before return and one PCR test after two days of return.
However, the immediate introduction of ‘amber-plus’ for people travelling to France has clearly spooked the travelling population and recent speculation in the media that the same rule will be applied shortly to Greece and the Balearic Islands has not helped.
The simplest explanation for the lack of demand is that UK holidaymakers have already made plans for the summer and often these don’t include going through the hassle of overseas trips.
So when will demand return?
If Covid rules remain the same, Facebook showing photos of sun-drenched beaches and mask-free outside dinning will quickly drive the FOMO (fear of missing out) factor.
The Canaries may see the first big bounce back in demand this winter as sunny long-haul destinations appear likely to remain out of reach with customers remaining fearful of being stranded a long way from home or the UK government changing quarantine classifications forcing a last-minute dash home.
The widespread presence of the beta variant of the virus in France and the country’s amber-plus status are likely to dampen demand for French ski resorts.
Combine this with the complication of crossing the border from the high-volume arrival point of Geneva (Switzerland) and you can see a messy ski season ahead.
My outside bet for a surge in demand is the US, with Las Vegas, LA and Hawaii appearing safe destinations due to their high vaccination levels. Obviously, this is completely dependent on President Biden abandoning the US’s ultra-cautious visitor rules, which is by no means a given.
The sad fact is that strong demand is unlikely to return until summer 2022 at the earliest, which is simply too late to save many travel businesses.
Strong demand will come back and travel will rebuild, but lessons need to be learned and airlines brought into the trust fund regime to ensure timely customer repayments.
Unfortunately, proposed new Atol rules seek to compensate for the lack of airline customer protection by loading even more financial responsibility on agents. If these come into effect, agents could have to fund airline flight purchases from their own funds.
This would force most agents to abandon dynamic packaging, reducing customer choice and in my opinion lead to fewer financially protected holidays.
The successful operators of the future need to remain asset light, overhead slim and nimble on their feet. However, moving forward an Atol licence will be a noose around the neck waiting for another Covid-like event to pull the lever on the trap door.
In many ways, it’s a summer for the brave this year.
Steve Endacott is chairman of Rock Insurance and comments regularly on industry affairs