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’

The Daily Telegraph - Business - - Front Page - By Oliver Gill

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.

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