LOTUS CORONAVIRUS UPDATE (16.04)
The Refund Issue
As the UK Government remains silent on whether it intends to change the Package Travel Regulation, the debate as to whether the industry should refund customers for cancelled holidays has intensified. Former bosses of Thomas Cook and Airtours Harriet Green and Richard Carrick joined Gold Medal’s Terry Fisher in supporting the ‘Right to Refund’ campaign set up by Kane Pirie of VIVID Travel.
Green said: “Consumers, customers and many people are struggling as they are made redundant, furloughed and feeling lost in the vortex of financial ruin and extraordinary debt….I think monies should be returned to folks as soon as possible both for the survival of good-will in the industry and the well-being of customers.”
ABTA’s intense lobbying and ‘Save Future Travel’ campaign has asked the UK Government to make temporary changes to the rules on refunds to buy firms time and confirm that vouchers will suffice in place of cash refunds. It wants the rules to extend the 14-day refund window initially to 31 July and calls for protection to be given to ‘refund credit notes’ offered in place of cash refunds in the interim.
The EU has already provided guidance to the EU Package Travel Directive to this effect and governments in France, Italy, Belgium, Spain, Germany, The Netherlands, Denmark and Greece have already changed their own laws to reflect this guidance.
In a bid to save jobs and travel companies whilst protecting consumers’ money, ABTA has said members have seen holiday bookings dry up while facing demands for refunds following the mass cancellations of future trips while still awaiting money back from airlines and hotels.
Noel Josephides, director of Industry Issues at AITO said of ABTA’s campaign: “Consumers will not lose their money. They would simply be asked to wait a while, thus sharing a little of the pain.
"Consumers, after all, will be far poorer should the majority of the travel industry be forced into liquidation for no good reason other than cash flow being temporarily stymied by the current set of PTRs, in circumstances that no-one could have foreseen a matter of months ago.”
Chancellor Rishi Sunak in Tuesday’s Government press briefing said he wants to get people back to work as quickly as possible once the lockdown has eased and insists the UK economy can quickly ‘snap back’ into health.
He said borrowing could be brought back under control — but only if the economy’s “productive capacity” remained largely intact.
“We came into this crisis with a fundamentally sound economy,” the chancellor said even though he admitted that it will be difficult in the short term. His comments followed the Office of Budget Responsibility’s report on estimates for the UK’s economy if the lockdown were to last three months: the UK economy could shrink by a third; tax revenues would be down 15% and public spending would rise to £88 billion – the highest it has been since 1945. However, it also estimated there would be no lasting damage to the economy once restrictions were lifted.
The British Chambers of Commerce (BCC) also found in a survey that about one in three British businesses has furloughed between 75 and 100 per cent of employees, while around two thirds have put at least some staff on the furlough scheme.
This week The Daily Telegraph reported that China went back to a trade surplus in March, which suggests that the world’s second-largest economy is boosting markets around the world and is in recovery mode.
Although infection rates rose and the daily death rate spiked to its highest level yesterday after a week of decline, Chancellor Angela Merkel set out plans for a lockdown exit.
- Shops with up to 800 square metres of space can open on Monday and libraries, archives, zoos, botanical gardens, car dealers, bicycle shops and bookshops can all open too, regardless of their size.
- Pupils will go back to school and larger retailers will reopen on 4 May.
- The bans on parties, picnics, and religious services and the closure of bars, clubs and restaurants and gatherings of more than two people from separate households, will stay in force until at least 3 May.
- Mass events such as concerts and football matches will also remain prohibited until September.
This follows the loosening of restrictions in Austria, Denmark and Czech Republic
Airfares could double because of social distancing orders
The Daily Telegraph reported and quoted an unnamed industry source that airfares could double after the lockdown is lifted as aircraft carriers are likely to be barred from fully filling planes to ensure that passengers keep a safe distance. "After lockdown there will be a mad rush and a price surge for airline fares. It would be no surprise to see social distancing on planes, and we will probably see some set guidance on how planes should do this.
"There are currently cheap fares available but this pricing is based on a full plane.”
It means holidaymakers planning to book travel to take place later this year, could be faced with a dilemma; book now and run the risk of cancellation, or wait and find fares have significantly risen.
The Telegraph went on to say that this could temporarily push foreign holidays out of reach for lower and middle income families who are being furloughed, losing their jobs and taking salary cuts. Consumer body Which? also said that British Airways is telling customers to call for a refund, only for them to then be told by an automated recording that the airline cannot take their call.
Ryanair says flights could be cheaper
In response to the story above, The Sun reports that Ryanair CEO Michael O'Leary claims that flights could be cheaper after lockdown due to an "airline price war".
O'Leary dismissed the prices of flight doubling proposals as "mad", saying they would be "hopelessly ineffective" as well as unaffordable.
The airline CEO explained that flight prices are likely to plummet as soon as the lockdowns are lifted, with Ryanair steeling for an airline price war.
Brushing off forecasts of a sluggish recovery, O'Leary predicted a swift traffic rebound, with the pain coming instead from "massive price-dumping" that traditional airlines now seeking bailouts would struggle to keep up with.
O’Leary favours the introduction of mandatory temperature tests and facemasks.
Reporting on half year financial results, Travel Weekly says that EasyJet CEO Johan Lundgren forecast restrictions on domestic flying would be lifted first, but with social distancing measures in place at airports and on flights for an unspecified time.
“We expect flying to come back in a slow way. We are planning scenarios. We need to be flexible in terms of how demand will be.
“We are working very closely with [European aviation safety agency] EASA. We will clearly look to have the middle seats empty at the start. Customers will want to see that particularly in the start-up period.”
Operations will have to change
A webcast with Princess Cruises’ vice president UK & Europe and chair of CLIA UK & Ireland Tony Roberts; Silversea UK’s Managing Director Peter Shanks and MSC Cruises UK & Ireland managing director Antonio Paradiso outlined how cruise operations will change after travel restrictions lift. Roberts said that public health and safety has always been at the forefront of what the cruise lines have done and communicated. “We will have to make significant changes in our operations in order to move and be successful.” He said CLIA will help the cruise lines work together to create new protocols and educate both travel agents and consumers as to what’s been put in place that means they can comfortably and confidently welcome people back onto ships.
Shanks added: “It’s too early to say what these protocols will be…but I am confident that the ambition of the industry will be to go above and beyond what people would expect so that we can safely welcome people back onto our ships in the future.”
MSC Cruises UK & Ireland managing director Antonio Paradiso said many protocols were “already in place”.
“We already have thermal cameras, and we all have deep fleet sanitation and cleansing five times a day. There is a lot already going on. But we just need to focus on some different areas like social distancing and how that is going to come into place because we will be back and we will be back stronger.”
Cruise pares back
TTG and Travel Weekly reported that Princess Cruises is paring back Alaska itineraries this summer and delaying the launch of new ship Enchanted Princess. Princess pledged to protect travel agent commissions on bookings for cancelled cruises. The action is being taken as the US line extends the suspension of all cruises until 30 June in continued response to the impact of the global outbreak of coronavirus.
Passengers booked on the newly cancelled voyages, who have paid in full, will receive a future cruise credit equivalent to 100% of the cruise rate paid plus an additional 25% for use on a cruise that sails on or before 1 May, 2022. Alternatively, full refunds are being offered but must be claimed by 31 May.
Seabourn has also extended the suspension of sailings. The luxury line’s five ships will not operate up until 30 June.
Skift, however, is reporting that CLIA believes that the CDC (Center for Disease Control & Prevention) order is unfairly singling out the cruise industry and that some cruise lines are continuing to report departures before the CDC’s no sail order is lifted.
The Times reports that the number of dedicated freight aircraft flying into Heathrow, Europe’s largest passenger airport, has increased more than fivefold during the lockdown, but April’s passenger figures will be down dramatically, with data showing flights departing every 12 minutes rather than the usual one take-off every 90 seconds.
March figures for Heathrow saw take-off and landings reduce by 35% with passenger numbers halving. Many passengers towards the end of the month were being repatriated.
Typically the airport handles only 47 freight aircraft per week, but it is now handling about 300 a week; Even so, this is not making up for the amount of goods normally carried in passenger aircraft, with cargo volumes in the month down by 32 per cent.
Essential farm workers flying in
The Times yesterday reported that British farmers are being forced to fly in fruit and vegetable pickers from Romania using specialist charter jets to keep up with demand during the coronavirus lockdown.
The first charter flight operating between Bucharest and London Stansted will land today, bringing about 180 farm workers to the UK from eastern Europe. The plane is the first of up to six to operate in the coming months to keep farms staffed with labourers.
Air Charter Service (ACS), a British company that arranges charter flights, has confirmed that it has booked the first specialist service to carry eastern European farm workers to the UK. Many British workers who have been made unemployed during the lockdown have applied for farming jobs but it is not believed to be enough to fill all vacancies.
The Financial Times says that this need is reflected across Europe. France is short of about 200,000 workers until the end of May, while Spain has a shortfall of 70,000 to 80,000. Italy needs about 250,000 seasonal workers in the next two months, while the UK normally receives 70,000 to 80,000 over the season and Germany 300,000.
Phocuswire has reported on how the Global Business Travel Association has been tracking the sentiment of its members since 4 February.
The global average percentage of business trips for March and April that respondents say have been cancelled as a result of the coronavirus is 92% (as of the April 8 poll), and Phocuswire speculates that the 8% of trips left are probably those deemed to be absolutely essential.
Respondents are seeing a longer timeline for reduced travel. The most striking shift by far is an increase in respondents who do not see regular business travel returning for a year or more.
On 23 March, just 1% of respondents said they expected a 12-month wait, and just two weeks later, 28% said they do not see regular business travel coming back for at least 12 months.
The 8 April version of GBTA’s poll shows more than half of respondents expect regular business travel to resume within two to three months and 62% of respondents (who are made up of travel managers and buyers as well as TMCs, suppliers and procurement managers said on 8 April said that the virus will change how their company conducts business once there is no threat from the disease.
What Hotels Can Do During COVID-19
Dragon Tail’s April webinar looked at the hotel sector. The web marketing agency that specialises in the Chinese outbound leisure travel market found:
In February only 10% of hotels in China were open with 68% saying that the impact would be more severe than SARS.
Looking at the online travel and distribution market in February, hotels were more impacted than any other sector.
Today 90% of Chinese hotels are open. [The South China Morning Post said that during the Ching Ming Festival from 4-6 April, hotel chains Accor and InterContinental Hotels Group (IHG) saw a significant increase in occupancy levels].
During the pandemic
To start with hotels had to communicate cancellation policies. Those providing clear communications and flexible cancellation and change policies have been met with positive responses – especially those who provided regular updates as the situation changed.
For those with loyalty club members, hotels were able to directly maintain relationships and promote future business.
By mid-February international hotel chains in China had announced membership and points expiry extensions. Some promoted forward bookings with extra loyalty points and free cancellation policies as incentives to book.
Social channels were taken over to show that hotels cared about the wellbeing of their customers – Constance Hotels in the Maldives posted messages of staff with signs saying ‘Stay Strong China’ – and encouraged customers to ‘share their memories.’ They also took the opportunities to highlight the hygiene measures they were undertaking.
Live cooking classes, recipes and cooking tips by hotel chefs were streamed and posted.
Spas posted exercise and yoga classes.
Those targeting a younger demographic hosted live streaming DJ parties.
To salvage revenue, international hotel groups in urban areas were :
- Promoting food delivery through participating hotels; gave food and restaurant recommendations and highlighted hygiene standards and checks on delivery drivers
- When customers attend cooking classes, hotels have provided deals or F&B vouchers for post-lockdown
- Giveaways of F&B and room night vouchers in online competitions
- Provided professional laundry services with door-to-door delivery
- For those able to provide online retail experiences, hotels are selling in-room furnishings such as bath and bed linen, pillows, scented candles and bathrobes
Dragontrail developed a ‘Wuhan, the City Together app’ that they will share with hotels and translate for free. The app helps medical workers find hotels near their hospitals with free or heavily discounted rooms – that has helped them to protect their families.
The app’s source code is available free of charge and Dragon Trail can provide free assistance, including translation services to establish a similar platform for any global destination.
Celebrity chefs provided meals to hospitals – as many have kitchens equipped for mass catering.
Other hotels have been turned into hospitals.
In China, some hotels used the down time to complete repairs and minor renovations. Travel agencies undertook online training.
First guests are likely to be locals, F&B venues, day-trippers, domestic travellers and younger people. Business travel is likely to recover first for long-haul markets and even long-distance domestic travel, which they anticipate will recover before leisure.
Later, Dragon Trail anticipates a boom in inter-generational groups keen to be reconnected.
Hygiene and safety. Multiple consumer surveys show that hygiene and safety are now the top concerns for Chinese travellers. Transparency about thorough cleaning and safety procedures will be essential to winning consumer trust.
Hotels should consider providing hand sanitisers in bathrooms, guest rooms, restaurants and check-in desks.
New technology is likely to be accelerated because of the crisis – and could be used to cut down on human-to-human contact. Dragon Trail flags how much consideration has to be given to this as human interaction is so important to the sector. Even if AI and self-check-in is possible, it might not be desirable. How about a video link to a person? Other considerations might be robot room service and digital concierges and area guides.
The Points Guy: How the virus will change the way we travel
Online media platform The Points Guy, which specialises in loyalty schemes has put together a speculative piece on trends for when travel restrictions are relaxed.
They speculate that travel will be different.
- Packing humans into small spaces and not checking people for symptoms like fever will be a thing of the past.
- We’ll take a dream trip. We’ve seen people’s lives cut short. Once it is safe to explore, we will take that epic trip.
- Travel insurance will spike. Illness outbreaks were typically not covered under most types of travel insurance policies, but the number of travel insurance policies sold has skyrocketed by 200% since January according to InsureMyTrip.
- Multigenerational travel will grow. The post-pandemic world may see an already-growing travel trend of bringing many generations together rise to the next level.
- Third party bookings will shrink. TPG points out that if you book through an OTA and something goes wrong, not only do you have to deal with the rules of the supplier, but those of the agency too and consumers have had problems cancelling and gaining refunds, customers would prefer to deal with the supplier directly.
- Frequent flyer accounts will be drained. We’ve already seen loyalty programmes change and contract and with an economic downturn; the cuts may go deeper. With households keen to travel post-pandemic, but with balance sheets looking worse for wear, people will want to cash in on their points – especially as they don’t know how much they will be worth later.
- Cruises will be shorter and closer to home. To start off with at least, cruise lines will come back with a changed lineup of itineraries as older people will be worried about travelling further afield until a vaccine is available – as recent issues with cruise ships getting passengers home has been very high profile. TPG points out that previous crises in cruise has seen the sector come back stronger than before.
- Brian Kelly, the founder and CEO of The Points Guy in a previous article on the future of travel said: cruise companies have constantly evolved and will need to offer better onboard medical facilities and testing for all kinds of illnesses. Better ventilation and sanitation will be needed to ensure outbreaks can be contained. Tests before boarding will be undertaken and buffets rethought.
- Hotels will work harder to prove that they have deep cleaned between guests.
- Flyers may want more space. Security lines could be reimagined with technology helping with the likes of facial recognition might help the process. Airlines could focus on the middle seat. Airlines like Delta and American Airlines began blocking some middle seats to keep passengers further apart.
Sandals: Don’t Worry
TTG has reported that Sandals staff have recorded Bob Marley’s classic ‘Don’t worry’ to support the travel industry.