In the first part of a new specialist series, Matt Purser – financial and regulatory expert, and friend of the Firebird Partnership – gives a current take on the issues facing travel businesses now.
"A good number of travel businesses have some tough decisions to make"
We are hearing that “travel is back,” but for some travel businesses, the damage has already been done. On 31 October, Crownshield Holidays, trading as Belleair, decided to stop selling holidays. The co-owner is quoted as saying “it was not worth continuing.”
I don’t know the specific circumstances behind this decision, but I do know that a good number of travel businesses have some tough decisions to make. Many borrowed money to get through the pandemic and have now started repaying those loans. With Merchant Acquirers looking for security, ABTA increasing bond levels, insurers increasing premiums, and ATOL introducing Escrow accounts for some, travel businesses are under extra pressure, even if “travel is back.”
On top of this, the business models of some businesses have changed. If your customers previously booked 12 months in advance and are now booking 3 months in advance, that is a very different business. Planning what suppliers are needed and when, securing better pricing and your business’s cash flow, are all affected by this change. Travel may be back, and it has come back differently. The difference needs careful planning, and we can’t expect to trade as we did before.
For some though, it’s not just about these pressures; instead they have fallen out of love with travel.
"Optimism seems alive and well among travel agents and tour operators"
Large corporations need to carry on for their shareholders, and a number of airlines have started to report changes in fortunes. The owner of British Airways, IAG, is expecting its operating profits to surpass 1 billion Euros; ANA (All Nippon Airways) has reported a first six month profit in 3 years; Ryanair and Wizzair both saw passenger carryings increase in October; Jet2 has added 45,000 seats for October 2023 half term; Loganair has reported an annual pre-tax profit, and JetBlue has delivered its first quarterly profit.
Optimism also seems alive and well among travel agents and tour operators who claim bookings and average prices are holding up. Whether that turns into profit remains to be seen, as costs increase too. We also need to be wary given Deloitte’s latest Consumer Tracker, which says the travel sector could be the biggest hit between now and the end of 2022.
"Across the sector we are hoping for stability"
We have seen another change of Secretary State for Transport with Mark Harper appointed on 25 October 2022. Across the sector we are hoping for stability, and for a Secretary of State who can stay in the post long enough to positively impact the industry – understanding the difference between an airline, a tour operator and travel agent. In his team will be Huw Merriman, and his promotion as transport minister from chair of the transport committee is largely seen as a positive move.
Elsewhere, one up and coming resignation which has gone unnoticed is that of Richard Moriarty, the Chief Executive of The Civil Aviation Authority. During his time at the CAA, he has been heavily involved in Consumer Protection and ATOL and has been a big supporter of the work the team have undertaken. Will his departure in 2023 change the direction of consumer protection?
Matt Purser has worked in travel since 1989, beginning with ATOL at the Civil Aviation Authority. There he was instrumental in scoping out regulatory changes to protect consumers. In 2005, he set up the Travel Trade Consultancy (TTC) and helped grow it from a start-up to a million-pound-turnover business. Matt is an expert for the Finance & MI and Regulatory modules of Firebird’s Foundations for Growth programme.
Learn all about the programme, and get in touch with Firebird, at www.firebirdpartnership.com
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