Chancellor Rishi Sunak needs to help travel businesses to “manage their cash flow” until holidays can resume when current Covid-19 restrictions start being lifted.
Sunak is due to deliver his long-awaited Budget on 3 March, with the travel industry continuing to push for him to include some kind of specific financial support for the sector.
Rajeev Shaunak, head of travel and tourism at accountancy firm MHA MacIntyre Hudson, said Sunak should address the industry’s “lack of liquidity”, which was the “biggest single danger” to travel firms at the moment.
“The travel industry needs to see a vote of confidence from the chancellor on 3 March,” added Shaunak, “Urgent measures are needed to save it from the enormous impact of the Covid-19 pandemic.
“The lack of liquidity is the biggest single danger to the industry right now and helping travel businesses manage their cash flow needs to be a priority.”
Shaunak called for an expanded grant system that would help businesses survive until travel and holidays can resume “which is unlikely before the autumn in any real numbers”.
“Business rates relief is vitally important, as is the ability to defer tax at a time when the industry has little or no revenue, a situation which has existed now for 12 months,” he added.
“Existing support mechanisms should also be extended. The furlough scheme, for example, should be made available for at least another six months.
“This scheme has been a real lifeline for the sector, but it still fails to recognise the need for every travel business to continue to operate while dealing with changing existing bookings and organising refunds – all at a time when there is no income coming in.”
Shaunak suggested there should be a “tailored” government grant to cover the cost of travel company employees having to process cancelled bookings and refunds.
“The chancellor should stay clear of even hinting about an increase in Air Passenger Duty (APD) which has traditionally been seen as an easy one to raise and on annual basis brought in £3 billion a year – at least until 2019,” he added.
“Despite being regularly called for, it is unlikely that we will see a cancellation of APD, given the need to balance the books following the government’s increased healthcare and business relief commitments.”