The return of lockdown brings with it familiar levels of anxiety and uncertainty, but this time around things are very different financially. The economic outlook, shaken in the spring, is now unravelling, particularly in the travel industry. The renewed restrictions to daily life have kept the fate of the hospitality sector in the spotlight. But Colette Doyle, a magazine editor who until October was overseeing six travel titles, says that the travel industry is strugging in the shadows and will take months to recover.
The UK government advised anyone over 70 to avoid booking a cruise and in one fell swoop the industry was deprived of a significant proportion of its clientele. Travel restrictions were compounded by lockdown measures imposed on March 23, grounding much of the aviation sector and upending the nation’s holiday plans. Speaking via Zoom from her flat in west London, Colette Doyle told me that things quickly got difficult at the small Islington company where she edited four business-to-business titles on aviation and two on cruises.
“I lost a third of my income”
The most senior employee at her firm, Colette was a full-time, permanent member of staff. She says that in April, “I was asked to attend a Zoom meeting and at that meeting we were all put on furlough.” Colette imagined that 80% of her income would be covered by the government as suggested by announcements in the media, “but there was a cap and there was tax and the net result was that I lost one-third of my previous income.”
Big companies were also relying on the furlough scheme, though this was called into question after British Airways claimed taxpayer subsidies to pay the wages of 23,000 staff, shortly before announcing 12,000 job cuts. Aviation minister Kelly Tolhurst said the scheme “was not designed for taxpayers to fund the wages of employees, only for those companies to put the same staff on notice of redundancy during the furlough period.” Colette believes BA should have scaled down salaries or cut working hours, leaving a more robust furlough pot for small and medium businesses.
As lockdown dragged on into summer, the industry’s busiest season was struggling to get off the ground. Like castles in the sand, holiday plans were crumbling, and airlines and travel operators were hit by a wave of cancellations. “In May and June some of our staff were made redundant”, Colette says. Her company wasn’t alone. The cruise sector, which until January was worth $150bn, began shedding jobs, issuing debt and discounting furiously simply to survive.
In June the International Air Transport Association warned that revenues would fall by 50%, from $838 billion in 2019 to $419 billion this year. Its projections assumed there would be no second wave of Covid. The Centre for Aviation feared airlines would soon face bankruptcy, which proved to be true for many, including Chile’s LATAM, Avianca Holdings – the second-largest carrier in South America, Virgin Australia, and closer to home Flybe. In August, American Airlines announced it would cut 19,000 jobs, and Virgin Atlantic filed for Chapter 15 Bankruptcy Protection.
Government action and inaction
During her time on furlough, Colette was determined to keep busy. A languages graduate, she began teaching Spanish online, “I don’t have a family or a garden, I wanted something to do so I gave weekly Spanish classes which made me feel I was doing something useful.” One of Colette’s titles focused on air freight, and as airlines rapidly shifted focus from passengers to cargo, sales of the magazine picked up. Colette’s period of furlough was brought to an end and she returned to work.
Others faced a different fate. In August, the Association of British Travel Agents (ABTA) warned that 39,000 jobs had already been lost or were at risk. ABTA said that without “tailored support” 83% of firms would be at “critical or serious” risk. Longstanding companies were unable to keep going, among them coach operator Shearings, round-the-world ticket specialist STA and tour company Cities Direct. Bookings in the cruise industry were 95% down on the previous year. Cruise & Maritime Voyages (CMV) closed in July and five of the company’s ships were put up for sale.
By September, the Association of Independent Tour Operators feared many other formerly vibrant companies were also in desperate straits. AITO executive director Martyn Sumners said the situation had been made worse by the government’s “many U-turns” and its failure to consult with the industry, particularly on quarantine measures introduced in June. For Colette, Boris Johnson did not take the virus seriously enough in February, “he failed to grasp the complexity of the situation”, and July’s introduction of travel corridors (allowing quarantine-free travel) was a “last-minute” decision.
When Colette later returned to furlough, she was aware the support would end in October. At that point many companies relying on the scheme were no longer able to retain staff, thousands were let go – and Colette was among them, “the nature of the job had changed quite dramatically because support from in-house and freelance staff wasn’t going to be available. I thought the decision made sense. But I felt adrift, nervous, anxious about seeking employment, though tempered by optimism.”
Channelling energy into something new
The furlough scheme was renewed with the onset of the second wave of Covid, but for Colette it came too late, “most of the staff who are still there are much younger and will work for lower salaries, the role of group editor no longer exists.” She believes the sector has been neglected, compared to financial help made available to the hospitality industry, “many travel agencies are small, family-run businesses, some feel very badly let down.”
Colette is currently teaching English as a foreign language, she remains sanguine about new opportunities but fears that aviation will not get back to pre-Covid levels until 2023. Even then she expects that business travel will suffer as trade events are now operating virtually. She believes that “75% – 80% of the cruise ship industry in this country has been hit, and is going or already gone. This has an impact on food suppliers, training and so on. A training company I know has made all their staff redundant.” Cruise ship passengers are generally older people who don’t usually book things online, “90% of bookings came via agencies who understood the ships and locations. If these people go, the cruise industry will definitely find it hard to bounce back.”
In the meantime, other factors will continue to develop, not least environmental concerns about aviation and the impact of giant ships bringing thousands of people to vulnerable or historic sites. Since tourism relies on the same human mobility that spreads disease, and will be subject to the most stringent and lasting restrictions, it is likely to suffer more than almost any other economic activity. Perhaps future economic assistance for the industry will better reflect these facts in the weeks and months ahead.
Does Colette have advice for others who find themselves in her situation? “You have to channel your energy into something else. It helps to remember there are lots of people worse off, you have to be thankful for small mercies.” In terms of practical tips, Colette says that it’s best to “plan ahead, get ahead, get the applications in now, improve your skillset, maybe consider a career change, ask yourself which of your skills are transferrable.” Anxiety can easily cause inertia. But given the difficult days ahead, early action might just bring an advantage to anyone unable to wait for the industry to find its day in the sun once again.