Travel sector calls for Spain rethink after £1.4bn wipeout
The knee-jerk reaction to Spain’s rising infection rate has needlessly jeopardised hoteliers and tour operators’ slim hopes of recovery ‘It will be ruinous for an industry suffering from the shutdown in March’
TRAVEL bosses are pleading for ministers to exempt top destinations such as Majorca and Ibiza from a new Spanish quarantine after it wreaked havoc across the industry on the first day of the summer holidays.
Some £1.4bn was wiped off the value of listed airlines and holiday firms as passengers landing in the UK from Spain were told they must self-isolate for two weeks due to a surge of cases.
Industry leaders are furious the decision was imposed with no warning.
Shares in IAG, the FTSE 100 group that owns British Airways, fell almost 8pc. Jet2 owner Dart dropped 8.5pc, easyJet also fell nearly 8pc and Ryanair fell more than 3.8pc, with fears growing that the quarantine could be extended across France and Germany.
TUI crashed more than 11pc as the UK’s largest tour operator cancelled all holidays on the Spanish mainland. Andrew Flintham, TUI’s UK and Ireland boss, urged ministers to move to a more regional approach on quarantines so that unrestricted trips can continue to holiday areas with a smaller number of Covid cases.
However, last night the Foreign Office advised against all non-essential travel to the Balearic and Canary Islands, as well as mainland Spain.
Tui said it was also cancelling all holidays to the Balearic Islands and Canary Islands from today up to and including July 31.
Airline body IATA called the blanket quarantine an overreaction that “does not accurately reflect the risk of a regional spike in one corner of the country”.
Simon Cooper, chief executive of On the Beach, Britain’s biggest online travel agent, said: “The travel industry ... [is] not set up to cope with the pace at which the travel advice is evolving.”
The news that Transport Secretary Grant Shapps is stuck in Spain along with hundreds of thousands of other holidaymakers is unlikely to be much consolation to the travel industry, unless perhaps it can be turned into a permanent arrangement. Labour is absolutely right. The Government’s decision to impose strict quarantine rules on the UK’s number one holiday destination with just four hours’ notice is utterly shambolic. Inflicting it on hordes of people as they were either boarding planes to begin their summer breaks or about to head home was plain farcical.
It will devastate the summer holiday plans of so many. There are 600,000 holidaymakers in Spain but as many as 1.8m people could be affected, once forthcoming bookings are taken into account. It means yet more costly cancellations and long waits for refunds.
And it will, of course, be ruinous for a travel industry already suffering from shutdown in March. Shares in airlines, cruise lines and tour operators tumbled. Ryanair has described the most recent financial quarter as the “most challenging” in its 35-year history after slumping to a €185m (£168m) loss. Ninety-nine per cent of the airline’s fleet was grounded from mid-March to the end of June as flight or travel bans were introduced across Europe. The firm carried 500,000 passengers compared with 41.9m in the same period last year. Turnover sank from £2.1bn to a paltry £113m.
Speaking on BBC Radio 4’s Today programme, finance chief Neil Sorahan described the latest quarantine decision as “regrettable” but appeared to play down the impact, saying Ryanair had not seen many passengers cancelling flights yet. He is kidding himself if he thinks the fallout will be minimal. There will be a scramble for the ejector seat as holidaymakers decide that 14 days’ quarantine is either not worth the trade-off for a week in Benidorm or that their employer simply won’t allow it.
Anyone thinking about booking a week on a sunbed in Tenerife almost certainly won’t bother now, and many will simply have the decision taken out of their hands. The Government’s handbrake manoeuvre prompted TUI, the UK’s biggest tour operator, to immediately shelve all trips to mainland Spain for the next fortnight.
The start of the summer holidays was meant to bring some relief to a travel industry that had been brought to its knees. Ryanair and the other major players will weather the storm but for hundreds of smaller hoteliers, restaurants and other businesses banking on the peak season for a lifeline, it threatens to be fatal. It won’t just be Spain either. Restrictions will almost certainly be imposed on other countries in the coming weeks, with France and Germany hot favourites. Again, it is likely to be indiscriminate.
Foreign Secretary Dominic Raab said the Government had to take “swift, decisive action” when the data from Spain showed a surge in infections, but case numbers began to spike nine days ago, and the resurgence has been in Catalonia – not the whole of Spain. Why the delay and why the blanket quarantine? Why not create regional travel corridors? And why do the rules apply to the Canary Islands and Balearics, which have lower infection rates and are hundreds of miles away from outbreaks on the mainland?
The Government has panicked again, and in doing so killed any chance of the travel industry getting back on its feet any time soon.
Online tax won’t save high street
When Mike Ashley and other prominent retailers complain that the internet is killing the high street, there’s obviously some truth to that.
Still, an online sales tax is probably not the answer. For a start, the timing would be wretched. A large chunk of the population doesn’t feel safe shopping on the high street. Others, with disabilities, simply aren’t able to. Buying goods on the internet is a genuine lifeline. And it would hit many of the traditional bricks and mortar retailers, because most have sizeable digital operations these days.
Even restricting it to those that generate more than 20pc of sales online wouldn’t make a difference for many. Next, for example, was already making more than a quarter of its turnover online a decade ago. Last year, that figure had increased to half.
Besides, there are more effective ways to bring the digital giants more firmly within the tax system. The most obvious would be to close the loopholes that enable them to get away with paying paltry amounts of corporation tax.
Separately, the Treasury could level the playing field by tearing up the outdated, punitive business rates system that penalises retailers with a high street presence and favours the Amazons of this world, who operate in hulking warehouses on the outskirts of towns.
There is plenty of talk from ministers when it comes to saving the high street but very little in the way of effective action.