Travel Trade Consultancy director Martin Alcock said September would see Atol, Abta and bond renewals and was the last month of the employee furlough scheme. It also marks the end of the moratorium on winding up petitions and the end of relaxation of liability for wrongful trading.

These last measures have temporarily prevented unpaid creditors issuing winding up petitions, with some customers having previously used this to force operators to pay refunds. Directors have also been allowed to bypass laws forbidding insolvent trading, which otherwise means they must put the business into administration or close it when it becomes unviable.

“One way and another, September is starting to look like a real cliff edge,” Alcock said in a TTG Restart Travel virtual seminar.

The four major collapses in the last few weeks – Fleetway Travel, CMV, David Urquhart Travel and Shearings – had included those which were “until six months ago, very profitable businesses,” he said. “This crisis doesn’t respect those sorts of attributes.”

“I’m sorry to say but I think there will be many more before the end of this.”

He advised: “I’m not sure how the CAA will handle the next few months, they won’t extend or delay the (Atol) renewal, it will be very much a last resort, case by case basis. Get in there and start the dialogue with the CAA as soon as you can because the later you leave it it’s going to become even more challenging.”

Despite everything, interest in travel was increasing and the industry was one where demand would return, he said. “The good news is we are seeing the return of bookings based on anecdotal evidence from the discussions we’ve been having with clients and what we’ve picked up in the press.

“Fundamentally, what we’re living through at the moment is a very, very rapid contraction of appetite, but it really is a timing issue. Travel isn’t a defunct product, this isn’t Blockbuster Video looking at Netflix coming down the road and realising it doesn’t have a place any more. All over the world people are dreaming about getting back to travel. I genuinely think resurgence of travel is a question of when and not if.”

Meanwhile, he advised against panic selling of businesses. “The reality is nobody is selling a business unless there is a distress angle. If you’re a good business that fancies your chances of surviving this it’s the worst possible time to put it up for sale. If you’re in distress, the only people that will buy are looking for a deal.”

There would be opportunities to grow and consolidate, he said. “What we all need to do is stay around long enough to catch that wave.” He estimated travel’s full recovery at 2-5 years.

Most recent figures showed domestic bookings down 10% from the norm, he said, but international bookings were still around 30% down. “If you’re trying to book a holiday rental in the UK, you really will find it a challenge to get something.”

When it came to overseas holidays, European bookings were “much stronger than long-haul; somewhere around 50% down on normal levels but it’s a big improvement on the 90% we were down in April”.

Data from Citi Bank shows travel website visits are improving for all sectors except cruise. Compared to 30 March, tour operator and agent site visits were down 47% from a low of 77%, hotels -53% from -78% and airlines now -37% from -69%. Cruise remains at -69%, a low it initially reached in May, due mainly to the FCO ban.

The inevitable consequence of uncertainty over the ability to travel and worries about companies’ financial health was late booking. According to Iata, in June, 41% of sales were made less than three days before departure, compared with 18% in June 2019. “There’s no way a travel business can run like that with those sorts of horizons; no way you can plan schedules, no way you can plan resourcing.”

This had consequences deeper within the industry for merchant acquirers, insurers and lenders.

“Customers aren’t the only ones that are nervous; all of the stakeholders are doing the maths and trying to figure out what their own positions are.” 

However, Iata was likely to relax financial criteria provided members were profitable in the past two years and passed a liquidity test, while Abta was making “pragmatic noises” about renewals. “But all roads, I think, at this point, lead back to insurers and bond providers. There just hasn’t been the capacity since Thomas Cook’s collapse and that’s got steadily worse.

“Every time there’s a failure and the insurer takes a hit, they’re less willing to take a bet on any new risk so I think we’re almost at a situation where it’s virtually impossible to get new bonding.”

Despite this, he said existing insurers were likely to continue with companies to avoid exacerbating the situation.

Another potential concern for operators during the crisis was the collection by agents of pipeline monies far in excess of usual terms. This was highlighted following the collapse of Thomas Cook, whose agents “were often collecting far more money from customers in advance than the tour operators realised”. 

“When that failure happened, tour operators had a much higher exposure than they ever anticipated.”

The Abta protection scheme does not pay out in cases where payments by clients to agents were beyond normal terms, he said. “It was a huge liability on lots of tour operators. I think that practice is much more widespread than a Thomas Cook issue, I’ve come across it a number of time recently.

“One telling point that came out in the aftermath of the Thomas Cook failure was Abta’s view that no contractual terms ever really specify when the agent should be collecting that money. They do specify when it should be paid over in advance of departure, but there’s nothing explicitly preventing in contractual terms the agent from doing that.”

He urged agents to look at how they pay their suppliers. Supplier failure insurance was now difficult to get hold of, he said. “You could look at trying to pay more by corporate credit card. A corporate can make a chargeback claim in the event of the supplier failing.” He said not every supplier accepted this payment method because of the cost, “but now is definitely the time to revisit that”.