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Analysis: The outlook for travel and Covid testing

Summer is on its way and hopefully the government’s traffic lights will turn green for many destinations, allowing them to welcome grateful UK visitors again.

Green they may be, but they are no use if the government has effectively stalled the industry at those lights by insisting on expensive PCR tests for returning holidaymakers as well as a pre-departure antigen test.

No-one in travel would quibble the need to stop Covid spreading, but there are concerns the cost of the test and capacity of testing centres will this summer turn travel’s roadmap out of the pandemic into a roadblock.

 

The cost of testing is unlikely to deter business travellers after more than a year of being grounded – and it is the corporate sector that will kick-start the scheduled airline sector; but for those paying for their own travel and test (or indeed their family’s), holidaying is not so appealing when the extra bill is calculated.

 

The government stipulates “green” arrivals will need to take a pre-departure test (possibly an antigen test) before they return to the UK as well as a PCR test on or before day two of their arrival back in England. This is added to the cost of any pre-UK departure testing and/or test demanded in destination at the start of the holiday.

 

Jet2.com offers PCR tests from £75, while Tui’s Newcastle passengers can book a £60 antigen test or £110 pre-departure PCR test. So the maths do not add up for most holidaymakers and especially families.

 

British Airways is offering passengers a supervised, remote antigen test from £39, designed to be used before returning to the UK, so a rough average for two antigen and one PCR test is more than £150pp depending on location and more still if travelling to an amber destination.

 

There is the added complication that PCR tests are conducted either via nasal and throat swabs or a spit sample – the latter not being accepted by some countries. Similarly, some destinations will not accept any tests performed at home and posted to a lab. It’s confusing and expensive and if there is any silver lining, it’s an area where agents can really show their worth by advising exactly what is needed.

 

Israel’s requirements show how travellers will be burdened with costs. It reopens to visitors on 23 May and all will reportedly be required to undergo a PCR test before travelling and a test to prove their vaccination upon arrival. To fulfil UK requirements, another antigen test will be needed to travel home and a PCR test two days later.

VAT removal?

A start to making UK testing more affordable would be to remove VAT, which means a £60 test becomes £50.

 

Health firm Salutaris People only charges VAT at its airport sites, not on laboratory tests. “We see it as no different from flu or pneumonia tests and diagnostic health care is not VAT-able,” said Ben Paglia, managing director of Akea Life, clinical services provider to Salutaris People.

 

Salutaris People is set to open 10 Covid centres covering Newcastle and Manchester. Its facility at Liverpool airport, already open, can handle up to 80 £110 PCR tests an hour or 3,840 over its six-day 9-5 opening, with results 24-48 hours later. It also boasts Europe’s largest mobile PCR lab, processing 1,000 tests per day, with results in three hours for £175.

 

The company is convinced they will be needed. Dr Brendan Payne who advises Akea Life, believes testing and masks for air travellers will be required for “at least the next three years”, while Paglia added: “We are preparing to be involved for at least two years.”

 

His Liverpool facility could increase to 5,000 people a week, with the airport expecting up to 40,000 a week in the summer peak. “If we get 10% of what goes through the airport we will do well,” he said.

 

Across the UK, Paglia said, there was “without a doubt” enough capacity for a “modest” reopening of the industry.

 

He blamed laboratories for expensive test fees, arguing that his airport test centres make only around an 8% profit. “Labs are operating at significantly greater margins.”

 

“I was paying £75 in March 2020 (for tests) and charging £100-£120 depending on delivery. The current price is £66. Price reductions have not been as significant as they could have been.”

 

Since March 2020, market leader Randox has provided 21% of PCR testing outside the NHS. It offers a £60 remote test with its airline partners, which rises to £120 when bought direct. A spokesperson said: “Randox provides kits to partner suppliers at competitive pricing. Many partners will provide additional services to the consumer and will price accordingly.”

Is there enough capacity?

The other big question is capacity; Abta estimates that in a typical summer, 38 million trips abroad are made. Even half this number will need significant testing capability.

 

As of 18 March, the government had approved “nearly 30” public and private sector laboratories and had received more than 80 applications from prospective test providers.

 

More providers should mean lower costs, but perhaps there is now slack in the clinical system that can be used for commercial purposes. Government statistics show current PCR testing capacity – used for NHS purposes, not travellers – is around 650,000 people a day. At its peak in January, 500,000 tests were carried out a day, but in the first week of April, daily testing fell to between 128,000 and 311,000, so capacity is being freed up.

 

Similarly, in terms of antibody tests, there is now a gulf between the 5,000 people tested by the NHS on 8 April and daily capacity of 122,000.

 

Iata’s UK and Ireland country manager Simon McNamara told parliament’s transport committee NHS testing capacity, now at “an excess level”, could be used for travel, “at cost”, which would push down private test fees.

 

It would also solve the VAT issue: “If it’s government supplied then that problem doesn’t occur.”

 

McNamara said Iata had found PCR testing between 50-80% cheaper in other countries than it was in the UK.

 

“There is a clear difference in the UK pricing model than other countries, that’s for sure.”

 

Paglia said there was some scope for NHS labs to offer services, but said the private sector was “pretty sizeable”. However, Christian Corney chief executive of Cignpost ExpressTest, which operates centres at Heathrow, Gatwick, Edinburgh and Birmingham and in the regions, disagreed: “We don’t see that being made available to private customers,” he predicted.

 

Corney believes this summer’s pop-up will be Covid test centres.

 

“We have 14 regional centres; we are aiming to grow this at one every couple of weeks and we’re talking to a number of airlines.

 

“Ultimately, the solution is not just going to be around airport testing, it will be a combination of home testing, health centres and in terminals. Today, there is significant capacity, but clearly one car park at an airport can’t support all the traffic.”

 

Corney plans to double space at Gatwick, where it offers a £60 PCR test, but declined to give capacity details.

 

The view from the test providers appears to be that short-term, capacity will match demand and more centres away from airports will spring up as this demand increases. The brake on demand, however, is price.

 

EasyJet chief executive Johan Lundgren has called £60 “a significant burden to the costs of a family” and called for government intervention. He said a £30 test would be more appealing.

 

The last word goes to Paglia, who believes the government must step in: “Rather than spend £500 million on free lateral flow tests no-one will use, subsidise the laboratories. At least the government should say lab prices should come down; that’s where the issue is.”

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