‘RCN expiry won’t spark cash crunch’ Ian Taylor


The expiry of Atol-protection for refund credit notes (RCNs) at the end of this month is unlikely to trigger a cash crunch for Atol holders or substantial losses for consumers, but the trade will face a crunch point late this year or early next. That is according to Travel Trade


Consultancy director Martin Alcock who pointed out the outstanding RCNs amount to “about a day’s worth” of Atol-protected sales. The CAA is poised to issue a


fresh warning to consumers to use outstanding RCNs or request a refund before Atol protection of the notes expires on September 30 after reporting in late July that RCNs


worth £54 million remain unused. That triggered fears Atol


holders could face demands for refunds totalling millions, although outstanding RCNs can still be used to book holidays beyond the end of September. However, Alcock told Travel


Weekly: “The Atol scheme was protecting 26 million passengers a year and something in the region of £20 billion in annual sales before Covid. The £54 million outstanding is a pretty small proportion of that. It represents only about one day’s worth of Atol-protected sales. “Given Covid struck in March 2020, a lot of the unspent RCNs will relate to the deposit portions of January 2020 bookings, and we were seeing a lot of ultra-low


Airports avoid major disruption over bank holiday


Ian Taylor


The bank holiday weekend passed without significant disruption to air travel with the Airport Operators Association reporting “everything seems to have gone well”. Aviation sources warned staff


shortages at ground handlers remain a problem but said soaring energy costs and a forecast recession now pose the biggest risk to airline schedules. British Airways announced the


cancellation of 10,000 flights to and from Heathrow this winter “to minimise disruption”. But sources


4 1 SEPTEMBER 2022


suggested the cuts were more to do with BA slimming its schedule in anticipation of reduced demand. An airline source said: “BA’s


adjustments to its schedule aren’t necessarily related to problems on the ground. It’s going to be a tough winter. Every airline is looking at its schedule. Carriers will be more cautious. If they get capacity right, they can weather a recession. If there is overcapacity they have a problem – yields collapse.” A second source suggested:


“Bookings for winter aren’t great. BA adjusted its schedule to not fly half- empty planes. If demand turns out to


be there, it will have higher fares.” The same source warned:


“Ground handling still has big problems. We still have airport teams taking luggage out of aircraft and that is not sustainable. Ground handlers have hardly increased wages and there aren’t people hanging around on the dole looking for jobs. We’ll have a problem so long as ground handlers don’t pay the going rate.” Gatwick announced the end


of its limit on passengers from September 1 despite Heathrow’s cap on passenger numbers remaining in place until October 29.


We’re seeing clients able to upsell to customers, converting remaining RCNs to new bookings


deposit activity at that time. So a large portion of the RCNs will be for individually low values. Many customers may have simply written them off.” He added: “The obligation on


Atol holders is to refund RCNs or convert them into Atol-protected bookings by the end of September. In practice, we’re seeing clients able to upsell to customers, converting remaining RCNs to new bookings at


substantially higher prices, meaning new cash inflow.” However, Alcock warned: “We


still see late 2022, early 2023 being a crunch point when the cost-of-living crisis bites hard on the sector. We could see a slowdown in bookings around the time of the sector’s traditional low point for cash.” RCNs played a vital role in


protecting many firms from bankruptcy in the first months of the Covid-19 pandemic, although the CAA and Department for Transport only confirmed Atol protection of RCNs four months into the crisis. Trailfinders founder Sir Mike


Gooley accused the CAA of creating a “monster” in providing Atol protection of RCNs and failing “to alert consumers to this jeopardy”.


Gatwick However, a source insisted:


“Airlines scream blue murder about the Heathrow cap, but fundamentally it is working for passengers who fly.” There was a setback on rail


services with Eurostar announcing a halt to direct trains from London to Disneyland Paris next summer, saying: “We need to focus on our core routes to ensure the level of service and experience customers expect.” The operator said it would review Disneyland services for 2024. Eurostar confirmed that services from Ashford International and Ebbsfleet won’t resume for another two years.


travelweekly.co.uk


PICTURE: Shutterstock/Yau Ming Low


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