Coronavirus: Travel industry in line for £4bn support package
The government is set to underwrite cancellation refunds given out by the travel industry as a part of a £4bn relief package.
Ministers are reportedly drawing up plans to guarantee refunds to customers of travel agents and holiday companies that have had their holidays cancelled by the Covid-19 crisis.
Various stories have emerged of travel companies holding off on handing out refunds, much to the anger of consumers, with some in danger of going bust.
The package is being finalised this weekend and is being overseen transport secretary Grant Shapps and business secretary Alok Sharma, with the help of Atol chief Andy Cohen, according to the Sunday Telegraph.
The scheme will reportedly see Atol-protected travel agents give out credit notes that are backed by a government guarantee.
This will ensure that customers get their money back if travel companies go broke in the future.
A Department for Transport spokesperson remain tightlipped on whether a package would be unveiled for the sector.
“The aviation sector is important to the UK economy, and firms can draw upon the unprecedented package of measures announced by the chancellor, including schemes to raise capital, flexibilities with tax bills, and financial support for employees,” they said.
“We are continuing to work closely with the sector and are willing to consider the situation of individual firms, so long as all other government schemes have been explored and all commercial options exhausted, including raising capital from existing investors.”
It comes as the Sunday Times reports that airfares may skyrocket as airlines prepare to reduce the number of passengers on their flights.
Carriers such as easyJet, Wizz, Delta and American have all said they would be removing middle seats for sale in an attempt to enforce social distancing on future flights.
This would lead to a 33 per cent decline in available seats for many low budget airlines and would likely lead to much more expensive flights.
John Grant, from aviation analysts OAG, told the Times: “Such a significant cut in capacity per flight will certainly lead to an increase in average fares as demand picks up.
“The operating economics of the airline industry are wafer thin at the best of times so removing 30 per cent of available capacity will have an inevitable consequence.”