Stricter Covid curbs will ‘kill travel’ and hit confidence, warn executives
The prospect of new restrictions on international travel sent a shudder through the travel industry on Monday, piling pressure on companies already reeling from a year of disruption. Shares in European airlines tumbled as the UK government prepared to introduce tighter immigration rules following concerns that new strains of Covid-19 could spread from international travellers.
Governments in Sweden, Belgium and Germany also tightened travel curbs over the weekend. British Airways owner IAG led the share price declines, falling 8 per cent, while easyJet dropped 7 per cent, cruise operator Carnival decreased 6 per cent and Ryanair was 4 per cent lower at the close on Monday. Travel groups devastated by national lockdowns and closed borders warned that additional measures could be the last straw for businesses and would knock consumer confidence during a key period for summer holiday bookings.
“Things are looking bad and these travel restrictions will make things catastrophic for the industry,” said Andrew Crawley, chief commercial officer at American Express Global Business Travel. A limited system of hotel quarantine is to be introduced in England this week but initially only for British residents returning from countries with new, more virulent forms of coronavirus, including Portugal, South Africa and Brazil. Whitehall sources said Downing Street would “reserve the right” to go further by requiring all visitors from anywhere in the world to isolate for 10-days.
Senior ministers will hold a meeting on Tuesday of the UK government’s “Covid operations committee”, at which the tighter measures are expected to be signed off. Johan Lundgren, easyJet’s chief executive, said customer sentiment was “reliant on newsflow”, but bookings showed there was a pent-up demand for travel whenever there were signs of governments relaxing restrictions. Glyn Jones, chief executive of Southend Airport, which is not running passenger flights at the moment, said the prospect of further restrictions was adding to consumer uncertainty over the summer season.
“When people are uncertain, they don’t tend to make buying decisions.” Airlines and travel executives are resigned to the early months of this year being a write-off. But there are mounting concerns that the critical summer season is under threat, particularly if the UK introduces mandatory hotel quarantine for inbound passengers.
Hotels run by national chains have been asked by the government to make rooms available particularly at airport sites for arrivals to quarantine for 10 days with travellers picking up the cost, say travel industry advisers. “At the moment the government is just putting layer upon layer of blocks on people coming into the country,” said Lana Bennett, chief executive of Tours International, which runs itineraries for incoming tourists to the UK.
The company took £1.4m in revenues in 2019, but Ms Bennett said it had taken no money since last March and that no new bookings had been confirmed for this year. The travel industry has been careful not to criticise public health measures, but has called for a pathway out of the restrictions in time for the peak holiday season. “Tens of thousands of jobs and billions in lost trade are at stake and so we need a road map out of these restrictions as soon as possible,” said Tim Alderslade, chief executive of Airlines UK, an industry association.
Joss Croft, chief executive of the trade body UKinbound, said the tourism industry would recover only “when quarantine is abolished” and that financial support was needed to ensure that the UK did not lose out to competitors during the recovery period.
Before coronavirus, the inbound tourism sector was expected to generate £24.7bn in spending last year but VisitBritain forecasts published last month showed that the number of visits declined by 76 per cent compared with 2019 and spending dropped to £5.7bn. Hotel occupancy in the UK in December had already been at its lowest level since May, data published by the analytics firm STR showed.
Mark Manduca, analyst at Citigroup, said Europe’s airlines could need fresh cash if summer schedules are disrupted. This would likely involve raising fresh capital from shareholders.