ABTA has again written to government ministers, including the office of the prime minister, to urge immediate action to prevent catastrophic damage to the UK travel industry.
The move follows what ABTA believes is a lack of action from the government in support of the tourism sector.
ABTA chief executive, Mark Tanzer, said: “The global pandemic has put enormous financial strain on tour operators and travel agents, with businesses seeing a collapse in sales while facing immediate repatriation costs and refund demands for cancelled holidays on a scale that is unmanageable in the short term.
“These businesses are themselves waiting for refunds from hotels and airlines and without this money, they simply do not have the cash to provide refunds to customers within 14 days.
“Existing regulations are entirely unsuited to deal with this situation.
“We want to avoid the scenario of normally successful travel businesses employing tens of thousands of people facing bankruptcy, resulting in holidaymakers having to wait many months for refunds through Government financial protection schemes.”
ABTA is asking the government to recognise the unprecedented nature of the situation and proposes the following temporary amendments to the package travel regulations:
- That the 14-day window for refund payments should be extended to a four-month period.
- That government should confirm the ongoing protection of refund credits.
- That where suppliers (e.g. hotels or airlines) cannot or will not refund tour operators, there should be an emergency government consumer hardship fund to help fulfil refund payments.
Tanzer added: “We are proposing some simple, temporary changes to regulations to buy more time for companies to keep trading, while ensuring customer rights are protected.
“Many European countries, including France, Belgium, Denmark and Italy, have already announced similar regulatory changes to preserve their travel industries and protect customers.”
ABTA has called on the government to take strong enforcement action against airlines who flout the law by withholding refunds due following the cancellation of flights.
ABTA has also shared feedback from its members on implementation challenges with the measures that the government has already announced to help businesses though the crisis such as the approval process for Coronavirus Business Interruption Loans and scope of the Coronavirus Job Retention Scheme.
Analysts have also warned the government may be taking risks in the aviation sector.
Following the announcement by chancellor Rishi Sunak that the UK will only step in to support airlines as a last resort, Nick Wyatt, head tourism at GlobalData, said: “It is now almost inevitable that the airline industry will require some degree of government intervention so the chancellor’s stance is a big gamble.”
Wyatt said the direction marked a clear divergence from the stance of other governments.
He added: “Airlines are a key part of a developed economy, driving connectivity that allows a country to compete on the global stage and also employing thousands of people.
“It is therefore puzzling that Sunak is saying to them that they should seek support elsewhere.
“If such help is not forthcoming, then it seems the government will act on a case by case basis, which may take time – time the industry does not have.
“Other governments are being more proactive, further calling the stance into question.
“Airlines will almost certainly feature in the United States’ $2 trillion stimulus package and countries that do this will retain a strong airlines industry post-Covid-19.”
He concluded: “The impact of Covid-19 is like nothing we have ever seen before.
“Airlines are capital intensive and are burning through cash while very little revenue is coming in.
“The severity of the cash flow issue is acute and while some airlines are reasonably well-equipped to deal with this, many are not.
“While there are certainly question marks over the dividend policies and share buyback schemes of some airlines, the current situation is a recipe for failures and government intervention is required.”
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