COVID-19 Updates

Coronavirus update 24th April 2020

It is now over a month since the UK population was placed in lockdown due to the coronavirus outbreak, with significant limitations on working, socialising, and travelling. We’ve rounded up the main news stories in the UK and across the travel industry right now to keep you in the loop.

 

The UK’s current status

Since 23rd March 2020, restrictions on personal movement have been placed on the UK’s public. These restrictions will be in place until at least 7th May and can be summarised as follows:

  • People must work from home where possible and should only leave the house for essentials such as food shopping, health reasons or daily exercise.
  • When out in public, people must always stay two metres away from each other.
  • People must wash their hands regularly with soap and water for at least 20 seconds and avoid touching their face.
  • Anyone with symptoms of coronavirus, or living with a person with symptoms, must self-isolate.
  • Those deemed as high risk (e.g. they have an underlying health condition) have been asked to self-isolate for at least 12 weeks.

As of 24th April 2020, there have been 138,078 confirmed cases of coronavirus in the UK and, sadly, 18,738 people have died as a result.

It is expected that many more people will be affected by the disease, but there is now evidence that the UK has passed the peak of the virus. Although some European countries are easing restrictions, the government has advised that it is too early for the UK to lift restrictions and the Chief Medical Officer has warned that some form of social distancing will be in place until a vaccine or successful medical treatment is found. Vaccine trials are going ahead, but the government has warned that an effective vaccine is unlikely to be produced this year. There are also efforts to develop contact tracing strategies, including an app.

It is clear that the country is in for a prolonged period of sacrifice and economic difficulty, but it is also clear that individuals and organisations are doing whatever they can to help. Oxford University has already started human trials for a vaccine, multiple companies have created ventilators for the NHS, and volunteers are sewing scrubs for medics.

 

The UK economy

With social distancing measures in place, much of the UK workforce is unable to work and many businesses are struggling as consumers stop spending. To help keep the UK economy afloat, the government introduced a number of measures such as business loans, financial support for the self-employed and relaxing mortgage and loan repayments. A popular initiative has been the Coronavirus Job Retention Scheme, allowing companies to furlough staff (stopping them from working temporarily) while the government pays 80% of their salary, up to £2,500 a month. An estimated 70% of private firms are utilising this scheme.

The UK economy will undoubtedly take a hit in 2020, but there is hope that the government’s initiatives will allow the economy to recover when lockdown is lifted.

 

Impact on the travel industry

The UK Foreign and Commonwealth Office (FCO) has advised against all but essential international travel indefinitely, meaning that no Briton will be able to go on holiday for the foreseeable future. This advice matches the guidance of many countries across the world.

With international travel inaccessible, this is proving to be an unprecedented and difficult time for the whole of the travel industry.

 

Legal obligations

Tour operators, travel agents and airlines are legally required to refund any customer who has had to cancel their trip due to FCO advice within 14 days of cancellation. This has put the UK travel industry under a lot of financial pressure, and many companies have offered customers vouchers rather than refunds. Unfortunately, this has created dissatisfaction among many consumers, and consumer magazine Which? has led the fight for tour operators and airlines to be fair and refund passengers.

However, the UK travel industry is reportedly expected to receive a £4 billion support package from the government; if these reports are correct, then the industry’s financial difficulties would be eased considerably.

 

Air travel

Air travel has become increasingly popular in recent years and, in 2018, over 4 billion passenger journeys were made. Air travel is an essential mode of transport which is taking a temporary hit due to the coronavirus outbreak.

Iata has estimated a current 90% collapse in air traffic, meaning European carriers will lose approximately $89 billion and putting millions of jobs at risk. Globally, it has become clear how much airlines are struggling as Virgin Australia announced that it was going into administration. Not only are airlines losing revenue, but they do not know when they can safely fly again, causing more financial uncertainty.

There have been suggestions that airlines may need to leave the middle seat empty when they do fly again to follow social distancing guidelines. However, RyanAir CEO Michael O’Leary has dismissed this option, stating that it would not lead to effective social distancing but would cause airlines to lose money if running at 66% capacity.

It is undoubtedly a difficult time for airlines, but there is also reason to have hope; air travel is essential for the world to become connected again and governments are likely to recognise the importance of supporting established airlines.

 

Looking to the future

Although people cannot travel for the foreseeable future, it is clear from any travel website, blog or social media page that people who were active travellers before the crisis will want to travel again when able. Sadly, there are some hurdles preventing people from booking the trips they are keen to look forward to. Financial experts are discouraging the public from booking holidays as the future is so unclear, and travel insurance policies will not cover cancellation due to coronavirus. Luckily, many companies are offering flexible cancellation policies in the hope of encouraging people to book again.

 

Our opinion

As with so many sectors, the cloud of uncertainty is hanging over the travel industry. In the UK, we do not know when or how restrictions will be lifted. Travel companies do not know when their customers can travel again, and it is almost impossible for many brands to make decisions about their future.

Something that is clearly important for tour operators and airlines is managing the relationship with consumers. There’s a balance between maintaining financial security and maintaining a loyal client base; if companies fail to treat consumers fairly then their reputation will be damaged in the long run, whether they recover financially or not. With some backlash against travel companies on social media, we believe this will be an ongoing challenge with significant consequences.

As always, we believe there is hope to be found in the current crisis. After months of restriction and isolation, one thing is for sure; people will want to travel again. Taking a step back from daily life will have allowed many to reassess their goals and priorities. This crisis has reminded us that opportunities can be taken from us at any moment and, for many, this will act as motivation to see the world when it is possible again.

Crisis unfortunately exacerbates the disparity between rich and poor, and it is a sad reality that many people will seriously suffer financially from the coronavirus outbreak. However, for those who are financially stable, or who have continued working while spending very little, it’s quite possible they will have more disposable income than ever. In turn, this spending power can help to revive poorer communities across the world through tourism.

In the coming weeks, governments across the world will need to start providing answers about the next steps after lockdown. Once uncertainty has eased, the industry will be in a better position to start planning for late 2020, 2021 and beyond. There is a long recovery ahead of us but, by supporting each other as a community, we will get there.

Byron Shirto

Managing Director

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