British companies in the Travel sector are facing their hardest fourth quarter in decades. As consumer confidence nosedives, fewer people are travelling abroad and, if they are, they are travelling less frequently.
Travel companies have been hitting the headlines for all the wrong reasons in recent weeks, with one of the UK’s largest two travel companies – Thomas Cook – among those seeking refinancing from their banks.
For consumers, they have been aware of pressures on their disposable income for some time but, until now, the annual holiday had been sacrosanct.
However, a deteriorating economic environment coupled with higher unemployment has led to a change in mood and there have been a flurry of reports suggesting that Britons may well forego their annual getaway this year in order to pay the bills.
For travel companies that offer these summer getaways, December is traditionally the very worst point in the cycle.
While there tends to be a slight uplift early on in the month, Christmas ensures that consumer spend is allocated elsewhere.
From a travel agency perspective, this is when the balance sheet is looking at its worst. But it is not just tour operators and travel agents that have been suffering. Last month’s collapse of Gatwick-based Astraeus Airlines is significant.
Costs associated with fuel, airport landing charges and air passenger duty have all added to stress being felt by airlines.