Furlough scheme used by majority of travel companies

Almost 90% of travel businesses made use of the government’s furlough job support scheme throughout the Covid pandemic, new research reveals.

As many as 84% expect to use the Coronavirus Job Retention Scheme until it ends on October 31 but the costs of the replacement Job Support Scheme will be too much for many struggling travel companies.

While 90% of businesses returned to active operations by mid-September, 60% don’t expect to return to pre-lockdown booking volumes and values until 2022, according to the survey of 255 mainly Abta members by tax and consulting firm RSM.

Almost a third of businesses (31%) plan to restructure current operations and 26% said they are looking to access further finance as they seek ways to maintain and flex operations before they get back to near pre-pandemic trading levels.

Getting the online experience right is also a priority, with a quarter of companies planning to invest in new technology.

RSM head of travel and tourism Ian Bell said: “In 2019, outbound travel’s contribution to the UK economy totalled £37.1 billion supporting over 220,000 jobs.

“For a large sector that was all-but shut down during lockdown it’s no surprise the industry has been one of the most reliant on the chancellor’s furlough scheme – particularly when ongoing challenges with quarantine and consumer confidence are taken into consideration.

“The travel sector was missed off the agenda again on Friday when extra support for the leisure and hospitality sector was announced and strong feedback shows that the new Job Support Scheme (JSS) launching in November will not do the job.

“The upfront cost of the JSS will be too much to bear for many cash-strapped travel businesses.

“With the double-whammy of obligatory customer-refunds and significantly reduced bookings over the summer trading period, the extra money just isn’t there.”

He added: “Our report shows the travel sector views the pandemic as a short, sharp, shock, with booking levels anticipated to revert to pre-pandemic levels during 2022.

“To meet these challenges, over half of businesses will look to either access finance or restructure operations in the next 12 months, whilst around 40% are considering a change to their operational footprint or are planning to relocate existing sites.

”Maintaining cash-flow will be the biggest challenge. Without further government support or a step-change in airport testing which might offer a lifeline to the sector it desperately needs, the next few months will be really tough.”


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