news comment
Chris Lee Barclays Commercial
ttglive.com
“Airlines are not alone in feeling the heat. Agents and operators are bearing much of the financial burden”
T
he ash cloud has spawned heated debate over the validity of airspace closures. Whether the decision was right or wrong, the six days of closures
across Britain’s airports have taken their toll. Airlines already suffering through substantial losses last year were ill-prepared to account for the additional financial hit they now endure. Each passing day until all holidaymakers are repatriated brings mounting costs to airlines as it does for travellers, tour operators, insurers and the economy as a whole. Airlines are preparing for substantial compensation claims for costs incurred by holidaymakers. Liability to passengers for flight cancellations and associated losses rests for the most part, by virtue of EU regulations, on the shoulders of the airlines. But undoubtedly, appropriate pay-outs will be hotly disputed. The airlines are not alone in feeling the
heat from Iceland’s volcanic eruption. Agents and tour operators are bearing much of the financial burden in the wake of the first natural disaster ever to close all Britain’s airspace. Tour operators are on the frontline in dealing with passenger complaints, resolving issues of repatriation, rebookings and additional accommodation, all at a cost. Crisis management has come into its own as
operators have played to preserve their long- term reputation instead of refusing to assist travellers. This has seen Tui Travel reporting daily losses of between £5-6 million a day at
16
30.04.2010
the height of the disruption. For smaller operators, such positive action can cause a headache in terms of managing their books in the short-term, and could well result in the need to fight a bitter battle with airlines to recoup losses later down the line. Many Barclays Corporate customers are
reporting increased staffing costs as they deal with alternative travel arrangements, although they generally managed to find alternative transport, arrange accommodation and rebook passengers without incurring substantial losses. Some travel agents have also seen new bookings coming to a virtual standstill. A lull in new bookings won’t help cash-flow, however it is unlikely to have a particularly long-term impact as prior to the volcano disruption bookings were up for this year. Now the uncertainty regarding flights is behind us, confidence in travel should be restored. Across the board tour operators have sought to effectively deal with the issues caused by the unexpected air travel disrup- tion, and they have worked hard to ensure that customers’ goodwill towards their actions will be banked.
Higher prices in the near future
may be one of the after-effects of this disaster. Yet many will be looking to the government to return the market to the position it was in prior to the influence of Eyjafjallajokull.
Chris Lee is head of travel at Barclays Commercial
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