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With the UK’s furlough scheme set to end this month, UK travel companies must make difficult decisions to ensure survival, including further redundancies. Striking a balance between cost reduction and future agility will be vital to protect future viability.

The UK travel industry is still suffering from extensive travel restrictions, and demand for international travel remains suppressed. The end of the UK furlough scheme could serve a devastating blow to the industry. Travel and tourism players were some of the first impacted by the pandemic and are likely to be among the last to recover. Furlough support has provided a lifeline for many. With support ending, further redundancies will inevitably occur, especially with travel demand set to take years to recover.

Travel will take time to recover

GlobalData forecasts UK domestic travel to rebound to 2019 levels during 2022, when it will reach 123.9 million trips. However, international outbound trips will take longer and will not return to pre-COVID levels until 2024, when they will hit 84.7 million trips.

With recovery not expected to occur soon, travel firms will be left fighting for survival once the furlough scheme ends. Furlough support has allowed companies to retain staff whilst navigating through tough operating conditions. Although domestic recovery is on track for a 2022 rebound, the industry must navigate the normally tough winter period first. Without sufficient demand, revenues will continue to be suppressed and companies will struggle. Extending the furlough scheme for the travel industry could bide time for the sector until demand begins to strengthen and save jobs. However, the prospect is slim.

A balancing act is required

Cost-cutting measures are essential for survival. As travel demand begins to emerge, albeit at a reduced rate, a fine balance must be struck between redundancies and future agility.

Redundancies are an easy cost-cutting measure, and not taking these could threaten survival. However, if employee numbers drop, and a surge in demand occurs, the agility of a company to respond to sudden upticks in demand could be impacted. Striking a delicate balance will cause headaches for many travel firms. For those reliant on international travel the loss could be far greater. With travel restrictions constantly changing, the prospect of a rise in traveller confidence is more likely to occur at short notice when travel is permitted to a destination.

If a firm is left under resourced, it could miss out on much-needed revenue. Conversely, retaining too many staff could result in costs spiralling out of control. A delicate balance must be struck between achieving optimal staffing for now and the immediate term while ensuring cost levels are manageable to ensure survival.

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