Brexit, Thomas Cook, sustainability, and a new dawn for package holidays; Abta chief executive Mark Tanzer sits down with TTG’s James Chapple to look ahead to 2020.
The dust has barely started settling after Boris Johnson’s remarkable election victory when I clasp Abta chief executive Mark Tanzer’s hand by way of greeting.
It’s less than 24 hours since the polls closed but already, Johnson has sought permission to form a new government and stamp his authority on this country’s future – and that means Brexit.
It’s hard to gauge Tanzer’s true feelings on the matter; Brexit is the enigma of our times. “It’s certainly a leap of faith,” offers Tanzer, diplomatically.
We’re in a small office near Abta HQ in London, which Tanzer says has become a part-time call centre since the collapse of Super Break and Thomas Cook. It makes me wonder where to start summing up 2019.
But with the election front of mind and the now very real prospect of a 31 January Brexit, we start with the new political landscape in which we meet.
“What we’ve been against is an abrupt no-deal departure,” Tanzer explains. “The election pretty much eliminates that, at least short-term. We’ve spent a lot of time preparing members and ensuring customers feel confident.
“But it certainly looks like there’s a strong enough majority to exit on 31 January. There would be a transition, which is good for customer confidence and members going into 2020.
"There’s still a lot of work to be done in a year. And there’s a possibility that if that isn’t completed and the PM sticks to his commitment to leave come what may, we could end up with another no-deal scenario.”
So far, the EU has agreed to extend the process, but Tanzer warns this shouldn’t be taken for granted. “Once we get into trade negotiations, every concession counts,” he says. “I hope the EU sees sense, but it’s not certain.”
The Brexit checklist is myriad: aviation; visas; posted workers; reciprocal healthcare; taxation; roaming charges – heaven forbid the Insta-selfie becomes a £1-per-upload casualty of Brexit. “There’s a lot that needs to be done to secure what we’ve already got,” says Tanzer. “And the timeframe is very small.”
He’s also wary of the blind eye government has previously turned to outbound travel versus inbound. “The challenge will be making sure, with every other industry clamouring for priority, that outbound tourism isn’t overlooked,” Tanzer explains.
If Brexit was, as Tanzer puts it, the theme that has run through everything Abta has done in 2019, the failure of Thomas Cook was the jolt that struck at the very heart of the travel sector.
“We were responding within hours,” Tanzer recalls. “We set up a call centre. We held industry calls twice a day with the CAA; this helped steer many companies through those bumpy early days.
“The thing about Thomas Cook was the scale – it had its own agencies selling other people’s products; it had a tour operator so agents were selling its product; the airline; the franchise arrangements; its own suppliers. The shockwave ran through the industry, and it’s had a very wide impact.”
Tanzer believes both the CAA and Abta deserve credit for averting a crisis of consumer confidence arising from Cook’s collapse. “It hasn’t really been a huge story of consumer detriment,” he says. “I was impressed by how quickly the CAA mobilised and got 150,000 people back in two weeks. People were brought home and are getting their money back.”
The Cook situation has, Tanzer says, rightly pushed airline insolvency reform back up the political agenda. “If they [government] are consistently going to repatriate, there should be an arrangement, a fund and mechanisms for doing it as opposed to improvising and leaving the taxpayer to pick up the bill,” he says. “It’s one of the things I hope the new government returns to.”
Days later, the government did, setting out plans to reform airline insolvency, albeit while proposing solutions that could be seen as contradictory to the Atol scheme.
Tanzer says Cook’s failure highlighted the value of package holidays and their viability. “If anything, I think it will consolidate the affection people have for packages,” he tells me. “Over the years, the market has been stable; those 22-24 million packages sold each year have been rock solid.
“Far from being their demise, our research shows people – including young people – are turning to packages, particularly if they want to do something complicated. They’re seeing that having someone who can organise a bespoke package with protection and support is a lot easier than sorting it themselves.
"And for the industry, margins are stronger in package holidays because you can price at your own level. I think ‘the package’ has a long way to go.”
Cook’s demise leaves a gap in the market, which Tanzer acknowledges is already being filled by Jet2, Tui and easyJet’s relaunched holidays division. “It’s a vote of confidence in the holiday sector,” says Tanzer. “EasyJet has the scale and aviation expertise, they’ve put an experienced team of tour operators together. We welcome their arrival.”
Moreover, Tanzer believes easyJet Holidays will encourage package holiday providers to embrace customisation
and flexibility. “It’s part of their differentiation,” he says. “Their schedules allow customers to choose their own days of arrival and departure.
“Personalisation of packages is a trend we’ve picked up. It’s more complex, but you’re adding value, you can get better margin. Customers will demand it. Those with more rigid programmes are going to lose market share.”
The travel sector lost another venerable brand last year – Super Break. Its failure raised questions about Abta’s decision more than a decade ago to allow members to protect only what they are legally required to, and forgo protection of, for instance, accommodation-only bookings.
Tanzer tells me this decision ensured operators such as Super Break did not suffer a disadvantage to bed banks. However, he acknowledges the Super Break failure has left Abta with work to do. “The issue is what is and is not protected,” he explains. “If you looked at Super Break’s T&Cs, they stated accommodation-only bookings were not.”
He says Abta will look at creating new tools to help members know where they stand. “It sounds brutal, but we’d remind everyone not to assume that just because someone’s got the Abta badge, everything they sell is protected.”
Throughout our hour-long chat, I detect confidence from Tanzer. “Our message to members is our research continues to suggest holidays are an important part of people’s lives,” he says. “At the same time, people are very value conscious – that doesn’t mean they want cheap, it just means they want absolute value.”
As we wind up, we touch on the other key issue of the moment – sustainability. “We’ve been tested on the financial protection side of things this year, and we’ve come through that,” says Tanzer. “I think we’re now going to be tested on the sustainability piece.
“Extinction Rebellion has focused minds on the carbon challenge, while the government has set carbon neutral targets for 2050. It’s not just aviation; cruise, hotels and supply chains are all part of the equation. If we don’t manage expectations, people could become anti-travel.”
Tanzer insists the sector has good stories to tell about efforts to mitigate its environmental and social footprint, such as the work of Abta’s Travelife initiative. “But we need to do more,” he admits.
Tanzer believes the sector can innovate and reduce its carbon footprint, and stresses offsetting should only be used as a last resort, adding: “I think we can get to a position where people feel confident they can travel without it costing the Earth.”