LOTUS CORONAVIRUS UPDATE (21.04)
FAILURES
Virgin Australia in administration
The BBC reports that Virgin Australia has confirmed it has entered voluntary administration - making it Australia's first big corporate casualty of the coronavirus pandemic. The country's second-largest carrier cut almost all flights last month following wide-spread travel bans.
The airline is now seeking new buyers and investors, after failing to get a loan from Australia's government.
Virgin Australia chief executive Paul Scurrah said: "Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis. "Australia needs a second airline and we are determined to keep flying."
Norwegian's subsidiaries in Denmark and Sweden go bankrupt
Norwegian media The Local has reported that low-cost airline Norwegian has reported its staffing subsidiaries in Denmark and Sweden have filed for bankruptcy, meaning roughly three quarters of its pilots and crew will lose their jobs.
THE REFUND ISSUE
ABTA Guidance on refunds
Today ABTA has written an open letter to the media which makes a direct plea to customers appealing for them to support members and travel companies over refunding for cancelled holidays. Yesterday ABTA announced that it is developing further guidance on refunds for cancelled package holidays.
The Covid-19 pandemic has created a cash crisis for travel companies, and the Government has yet to respond to the industry’s request for urgent action to protect jobs and customer money.
In the member zone of ABTA’s website, there is an overview for members of what credit notes are, what they should contain and a reiteration that they are not the same as vouchers, which do not come with financial protection.
ABTA has also published a Q&A on the consumer advice page of its website.
ABTA’s CEO Mark Tanzer said: “I absolutely understand the frustration and concern felt by customers and am aware of the urgency to get their money back to them, but it’s in nobody’s interests for normally healthy travel businesses to go under. As well as the loss of thousands of jobs, it would take many months for customers to get a refund, many more than if they accept refund credit notes.”
Ben Clatworthy in The Sunday Times outlines the issue too and says critics of the ABTA stand describe the move as akin to the travel industry asking its customers for an interest-free loan. “This is a time of intense financial strain for many families and denying them money is not acceptable,” an industry source said. “If a business requires a loan, that’s what banks are for.”
Government amends to PTR hopeful this week
The Sunday Telegraph reports that Government plans to offer a cash bailout are still in the pipeline.
The plans include a guarantee from Government that Atol-protected credit notes from agents will be protected if the supplier collapses.
Proposals are reportedly being finalised by transport secretary Grant Shapps and secretary of state for business, energy and industrial strategy (Beis) Alok Sharma, after Andy Cohen, head of Atol, green-lit the idea.
ABTA believes that the changes to the Package Travel Regulations (PTRs) to ease the refund burden on the travel sector could be announced when parliament returns on Tuesday (21 April).
Transport Secretary: “I won’t be booking a holiday at this point”
Industry bodies were up in arms when Grant Shapps said on the Today programme on Friday that “I won’t be booking a summer holiday at this point.”
An ABTA spokesperson said “it shows complete disregard for the UK travel industry.”
A Downing Street spokesperson supported Shapps’ comments and said: “While we are making progress in the fight against coronavirus, we are not able to say with certainty the point at which the social distancing measures can be relaxed,” he said. “As of today it is a fact that both the guidelines and the official Foreign Office advice do not allow for people going on holidays.”
Asked about the threat to the sector, Shapps told the BBC he could not offer travel firms further guidance as to when restrictions could change, as that was a matter for scientific advice. The impact of the pandemic would reshape many industries, including travel and tourism, he predicted.
Shapps continued: “But we know that we won’t be able to save every single business in every single circumstance. It would be wrong for me to sit here and tell you that there will be no changes as a result of this.”
Repatriation: UK Organised Fewest Flights in EU Scheme
The Guardian reports that the British Government has organised fewer EU-funded emergency flights during the coronavirus pandemic than any of the major countries eligible, which means that four in 10 of the 165,000 Europeans who are now stranded around the world are UK nationals.
CRUISE
The Observer ran a mostly vitriolic feature on the cruise sector entitled ‘That Sinking Feeling’. Rowan Moore said “accidents, pollution, mistreatment of workers and cultural vandalism….even before Covid-19”. The luxury cruise industry had a dismal record of corporate probity and he questions how it will emerge from the current crisis. It lists all of the Princess issues: Diamond Princess in Japan: 700 infections, 8 deaths. Ruby Princess – from which the 2,700 disembarking passengers in Sydney became the biggest largest source of Covid-19 in Australia. Grand Princess in San Francisco and Coral Princess in Florida, which followed two outbreaks of norovirus in the Caribbean Princess this year – he also names Holland America Line which had a ship that sailed around Chile with sick and dying pax.
He questions health and environmental practices and mistreatment of human rights.
He says:
- The cruise sector had a 7.2% growth in revenue rate between 2010 and 2019.
- The industry hires the best lawyers; lobbies and companies are registered in places where they pay low taxes and swerve employment rules
- The association CLIA says it sets regulations that are higher than international levels. But admits nothing happens if cruise companies breach these standards
- The revenue benefit to local hotels, restaurants and bars is limited.
- Cruise sector says that it creates employment
- In its defence, the customers love the product.
Moore quotes CLIA as saying: that they “aim to do our part to protect the sanctity of the destinations we visit so that they can remain a vibrant place to live and visit for generations to come.”
His conclusion is that if the cruise sector wants public money and public trust, it should accept its public responsibilities.
Prepare for a changed industry
Sue Bryant interviewed a number of hardcore superfans of cruise for a piece in The Sunday Times but believes that despite their enthusiasm, the industry will change when the restrictions lift. Jennifer Holland, a cruise and tourism researcher at the University of Brighton says: “The vitriol against cruising has been shocking.”
Bryant says: “Love it or hate it, the industry is resilient. Certainly, cruise lines are struggling with plummeting share prices and mass redundancies. But cruising has survived 9/11, Sars, piracy, zika, the financial crisis of 2008 and the sinking of Costa Concordia in 2012.
“People love the freedom, the value for money, the sense of being looked after, the joy of being at sea — these are such key parts of the motivation to book,” Holland says. “Overwhelmingly, my study found that cruisers view this as a ‘safe’ holiday and place significant trust in the cruise companies and officers and crew to look after them.”
Cruise Critic reported on a recent survey that found 75% of its readers would cruise as much or more after the pandemic.
The industry has aimed to target a younger demographic, which Bryant believes has been successful.
But, she says, the fate of cruising in 2020 is uncertain. Pretty well all lines have said they won’t operate until mid-June or July, and this is a rolling deadline that keeps getting pushed further back as borders remain closed and travel advice tells us to stay at home.
Next year, though, is a different story. “We’re seeing some bookings for the last quarter of this year and an equal spread over the first three quarters of 2021,” says Simone Clark of Iglu, one of the UK’s largest cruise travel agencies. “The Canary Islands are popular for January 2021, and the Caribbean and the Mediterranean are strong.”
The luxury cruise line Crystal has in the past week taken more than $10m in bookings for later this year and beyond.
Added comments from Sue Bryant
- On a separate webinar briefing, Sue Bryant also briefed the industry and made the added comments:
- The sector supports 1.7 million jobs. Dedicated cruisers can’t wait to get back on board.
- She is not promoting any summer departures as cruise dependent on a great number of factors being open: destinations; restaurants; flight routes and can’t even run banked features as they don’t know whether the itineraries will be there when restrictions lift.
- If you want a bargain, book this year, unlikely to be bargains next year as lots of people are being rebooked for next year.
- New launches delayed from this year to next.
- Bucket list and expedition cruises to exotic and exciting places to go will grow.
- She suspects smaller, river cruise and expedition cruises will be segmented and differentiated from bigger cruises. But all unknown.
- She suspects there will be more demand for destination-led stories. Norwegian fjords for instance will be popular – it’s a safe destination and near to home. But dependent on who opens borders to cruises
- It’s possible river cruising in Germany will open fairly soon.
- Americans will first start cruising close to home or in the Caribbean.
FT: Cruise industry will roar back into business
David Stevenson from The Financial Times believes that the cruise industry – and particularly Carnival – will – “suitably chastened” roar back into business. He takes a similar stand on EasyJet and Ryanair too.
VP of Carnival UK & Europe Tony Roberts in TTG
TTG ran a piece from Tony Roberts, Vice President of UK and Europe of Carnival which owns Holland America Line and Princess Cruises, outlining his sympathy to everyone who had caught Covid-19 and highlights the lengths the company goes to in order to ensure the highest health and safety levels.
He said: “expect to see new guidance in due course which will give even more reassurance to people who already enjoy a cruise holiday, and will help persuade the yet-to-cruise market there is still a line and a destination for them.”
This week Lyn Hughes – Editor in Chief Wanderlust; Sue Bryant – Cruise Editor for The Times and Sunday Times and Kash Battacharya – Founder Budget Traveller were on Social with Media
AVIATION
The Times followed up on reports that easyJet was thinking of not selling the middle seat in aircraft with a piece which reported that that carriers were likely to be forced to leave the middle seat vacant when normal commercial flights resume to maintain social distancing. It also reported that the Airport Operators’ Association (AOA) has said that passenger numbers are unlikely to return to pre-pandemic levels until 2022.
Recovery in aviation
An ANTOR meeting with insights from Dale Keller from the Board of Airline Representatives in the UK (www.bar-uk.org) was given to members on Friday 17 April. He outlined some pointers about how the aviation industry is set to recover:
Slow return to air travel predicted:
Outlook for the aviation industry is currently bleak.
Three weeks ago, IATA predicted a $250 billion fall in revenue in global aviation industry and a -35% reduction in revenue passenger kilometres y-o-y.
Now, just three weeks later, the loss of revenue is now predicted at $314 billion and a 48% reduction in revenue passenger kilometres y-o-y.
Europe has the biggest global drop – There is an estimated $89 billion loss in revenue in Europe alone and -55% drop in revenue passenger kilometres y-o-y.
Government / Regulatory support:
Governments do recognise the bleak state of the aviation industry but are also conscious of not favouring one airline over another. Some governments have provided relief for some state-owned airports.
As yet, the UK has offered little sector-specific support – the main thing helping aviation (as with all other industries at present) is the job retention scheme.
Regulation change will need to come before market recovery and stimulation.
Restoring consumer confidence:
Consumer confidence is key – people will simply not want to travel as they did before (at least in the short term).
Airports are now looking at what they’re going to do in order to restore consumer confidence and airlines will have to do the same.
From Monday, there will be a new team within the Department for Transport called the Restart and Recovery Unit, who will be tasked with looking at getting aviation working again and how to instill confidence to fly.
This will include looking at:
- How people travel to an airport
- Hygiene at the airport and social distancing procedures
- What’s happening on board in terms of airline product
Some are seeing this as a restart of the entire business.
In terms of testing at airports, he mentioned that Emirates have started to trial small-scale testing at Dubai on repatriation flights. But there are lots of discussions / issues over what is feasible to roll out on a global scale. IATA will be working with governments to ensure consistency on requirements at airports for entry – this will be important in building consumer confidence. There can’t be some airports with different rules to others as this will be confusing and put people off travelling altogether if they’re unsure of the rules.
Restart phase:
This will be gradual. Keller guesses it will be at least a two-year process before airline schedules get back to anything near last summer.
Those routes deemed ‘essential’ will be the first to come back. Network carrier airlines with business routes are also likely to lead. The VFR market should also come back quickly. These will all be routes where airlines are confident there’s demand – the more VFR and business travel you can add into the mix, the more likely the route will pick up quicker.
Regional airlines and marginal routes (and some leisure routes) will be in jeopardy. It’s of course difficult to predict how people will travel post-Corona but he guesses that short haul city breaks (the second or third annual holiday) are likely to be hit – so those budget airlines that travel to ‘second’ city airports will be slow to recover. Some experts are saying short-haul, low-cost routes could be the most impacted of all.
There is nothing to suggest that Brexit will affect recovery or connectivity as everything was in place before the pandemic.
Transmission on board and ‘the middle seat’ issue:
It’s been very difficult to get science on the risk of transmission on board, but there has not been a greater number of cases among airline crew than other service industries, so there aren’t statistics to show that there is a greater risk.
The air ventilation system on an aircraft works in a similar way to a hospital operating theatre so it shouldn’t make transmission any quicker.
Sitting next to an infected person is more likely to spread infection.
However, removing the ‘middle seat’ does not fit (budget) airline models. It will simply push up prices and then reduce demand.
This will be looked at by the Restart and Recovery team at the DfT when it launches next week so there should be more clarity on this issue in the next few weeks.
The UK Government and the European Commission will discuss regulatory requirements on social distancing – the cost implication if this is made a regulatory requirement would be significant.
The health of our airlines:
IAG has said that they don’t need additional help from the Government – it has enough cash reserves to get them through this.
Virgin Atlantic had financial woes pre-Corona and Branson has now injected £215 million to save the brand. It is highly likely that Virgin Atlantic will be in discussions with the Government and to ensure competition remains on long-haul routes.
EasyJet has significant cash reserves but the impact of grounding its entire fleet will be severe.
It is likely budget airlines, if not all airlines, will have to build a new operating programme going forward. They won’t operate in the same way they used to. Some smaller and low coast airlines will have to be treated almost like a start-up.
New Covid-19 hub from ETOA
The European Tourism Association (ETOA) has significantly increased its business resources for members with a new Coronavirus hub on etoa.org which includes a programme of business support webinars and a resources page with links to a range of official information from the European Union, national governments, tourism boards and research from multinational organisations such as UNWTO and OECD.
DESTINATIONS
96% of destinations have introduced travel restrictions
Breaking Travel News says that a new report from the World Tourism Organisation reveals that as of 6 April, 96 per cent of all worldwide destinations have introduced travel restrictions in response to the pandemic. Around 90 destinations have completely or partially closed their borders to tourists, while a further 44 are closed to certain tourists depending on country of origin.
Lockdown elsewhere
The Daily Mail has published an update on where other countries are in terms of lockdown. Whereas Germany is due to open small shops next week and schools are opening from 4 May, France has extended lockdown until 11 May.
95% of tourism sector activity to stop in the Balearics in 2020
The Diario de Mallorca reports that tourism pressure group Exceltur calculates the tourism sector will reduce by 95% in the Balearic Islands this year and that the islands will add losses of 13.520 million euros compared to 2019.
The post-coronavirus world in hospitality
On 2pm on 30 April Travel Weekly Group will host a free webinar for HR directors across the UK hospitality and travel industries that will discuss how to bring people back into the workplace and cover technology and communicating changes and restrictions in the workplace.
TRENDS
Consumer Attitude Tracker
Consumer insight agency BVA-BDRC has released a new report that reveals that there is a general improvement in national mood and optimism, but there is less clarity this week on precisely when consumers intend to start booking, travelling and visiting again.
As there is now more discussion in the media around the exit from lockdown, it is becoming clear that many consumers are reticent about committing themselves to business as normal, until a period of time has passed, or for some, until a vaccine becomes available.
Following the trend observed in France, there is significant improvement in national mood and optimism, evident across all segments – including those who have been financially impacted by the crisis
- The majority, 3 in 5, still believe the worst is yet to come, but this is down from approximately 4 in 5 a week ago
- Confidence in HM Government’s handling of the crisis remains unchanged, with almost two thirds confident, and a little over a third not confident
- A setback for the holiday market after two weeks of positive trending. This week, slightly more consumers go back to saying that they don’t know when they will be planning and booking their next holiday – both for staycations and overseas trips. On average, we are still looking at a 5 – 6 month lead time.
- While taking holidays are high on the list of things consumers want to do when the crisis is over, over 60% say that they would want to wait for a period of a few weeks after the confinement is over before feeling comfortable enough to book. 1 in 5 say that they won’t feel comfortable about booking a holiday until vaccines against the coronavirus are available.
- For hotel stays, flights, train journeys, as well as visitor attractions, the picture is as described above for holidays, with something of a setback in terms of fewer people having a clear view on when they will next be booking / travelling.
- Of those who have made accommodation, flight or holiday bookings, there is a 3rd consecutive increase in the proportion who are planning to proceed as planned, conversely, a further decline in the proportion who plan to postpone their booking to a later stage.
12 Predictions of our future
Skål International Bangkok President Andrew J Wood gives his thoughts on what we can expect to see once the Coronavirus starts to dissipate on Travel Daily:
1. Coronavirus will dissipate becoming less deadly but will not disappear.
2. Rebounds are a very real danger and countries such as New Zealand and Australia are already discussing keeping borders closed for 12 months to avoid any rebound. Stopping both inbound and outbound visits. They will not be alone – other countries will restrict access also.
3. Domestic tourism and travel is set to explode.
4. Family travel will also boom. The decision makers – will be the kids! Gear activities and menus around the decision makers.
5. Activity and experiential vacations will be key.
6. Hotels will take firmer control of room inventory – having best available rates only on their websites for direct bookings and their own social media platforms.
7. OTAs will finally lose their stranglehold on hotel bookings and their huge 25% commissions.
8. Travel agents regrettably will see even further business declines in their business volumes post Covid-19. Potential travellers will continue to D-I-Y digitally as they are becoming increasingly computer proficient and savvy surfers.
9. Green travel and care of the environment will see record volume growth as the travelling public now ‘get-it’ after the effects of a virus that stopped the world in its tracks.
10. Business travel and daily commuting will decline as we embrace work-at-home. It works! We will see, in city locations, corporate business shrink to 4D3N (4 days, 3 nights) during the week and leisure related business increase to 3D2N.
11. Video conferencing and webinars will increase but face-to-face meetings and conferences along with trade shows and congresses will survive. We are human and we like human interaction.
12. As domestic and family travel grows, 5-star hotel occupancies will decline. Mid-range hotels will see the fastest growth.
MEDIA
Backdoor state aid for the UK’s media
Simon English of The Evening Standard says that two weeks ago the UK’s print media looked as if it was in dire straits, but now, thanks to the launch of the a three-month multi-million pound advertising campaign across hundreds of newspapers encouraging people to stay at home, the future is rosier. The pandemic has also seen Procter & Gamble follow suit with plans to ‘double down on marketing their brands.’ Whilst the Government’s plans were set out to be a public information campaign, they are also acting as a newspaper bailout.
TravMedia Webinar: Coronavirus Crisis
In the first of a new series launched by TravMedia to bring together panellists to discuss current affairs within the industry, these are the headlines.
Lisa Minot, The Sun:
- She is looking for inspirational, bucket list and advisory content for consumers.
- New section has been introduced: Dream duo.
- She has a new column: Take three. Looking for a budget, bargain and blowout option of any three things related to travel.
- Staycations and value travel to be key trends following lift in restrictions.
Isabel Choat, The Guardian:
- Virtual travel continues to be a main theme.
- The Guardian is currently running features it wouldn’t ordinarily run about places where it is unlikely readers will travel like Papua New Guinea.
- Print travel has been momentarily dropped however online continues to offer daily content.
Jennifer Morris, TTG:
- TTG has seen huge website traffic in recent weeks.
- They are running a new survey titled ‘Travel Agent Tracker’ which has been designed to monitor the state of the industry. Apparently 1/3 agents made a booking last week which is better than expected.
- TTG is currently not publishing the mag however digital versions and online content continues.
- They have launched their own Coronavirus hub
- They are running the hashtag #OneTravelIndustry on social media and working with other travel trade media. Solidarity is the message.
Lyn Hughes, Editor in Chief of Wanderlust was at a separate webinar and said:
- Wanderlust website took initial dip but picked right up again. They have evolving content with entertainment for eg profiled – people round the world and what lockdown is like for them.
- All online destination features badged ‘When it’s fine to travel again’.
- Changing frequency of print edition with skinnier editions as hit by loss of advertising.
- Will release a reader’s survey this week. They’ve had 2,000 responses. Sneak preview: Readers keen to travel and to travel this year. Some are wait and see. A lot see UK as the first trip followed by Europe. They will also have detailed info on how many want to go to Asia and Africa etc which will inform feature planning.
- Next issue has only three main features rather than five. Hasn’t second guessed destinations to open up.
- Next issue will be Galapagos as it’s #1 on the wishlist; Brittany – because it is close to home and round-up on Ireland
- June issue is still being worked out. LH wants to bring in a major UK piece, which she is commissioning this week.
- Website has positive news stories which work well.
- Those in their 50s and 60s will be gung ho and want to fulfil wishlists. She says that ‘revenge travel’ will be big (post lockdown)
- More UK and a bit more Europe.
- Those over 70s will find it harder to get insurance.
- After domestic tourism boom, consumers will look to safe destinations. Ireland to appeal to the UK market.
- Some countries may insist on a certificate of immunity.
Get Us Out
The Mail on Sunday selected a group of ‘experts’ – including economist Gerard Lyons, who has developed a traffic light system exit strategy as the Government won’t currently openly discuss the issue.
The experts said:
- The Government should spell out clear strategy for ending lockdown
- Re-opening has to be triggered by a significant fall in infection rates
- If cases fall sharply, the UK could ease restrictions as early as Tuesday next week
- Garden centres and the DIY stores should be the first to open
- Travel to parks and open spaces (by driving) should be unrestricted, with social distancing maintained
- Psychologists say that people will be anxious for their health and have social anxiety as we emerge
- Need to kick start the economy to support medics
- Social distancing and mask wearing should be encouraged
…And Finally
Cheers to Beers: Czech isolation care package Six bottles of Czech beer is being sent to holidaymakers who have had to cancel their flights to Prague because of the virus. See: https://budweiserbudvar.com/uk/blog/2020/04/08/cheers-from-czech/