According to data by the audit, tax, and advisory firm Mazars, insolvencies of UK travel agents and tour operators has jumped from 59 to 69 in the last year with the month of July having nine travel businesses become insolvent rising from one in the same period in 2020.

Mazars stated that the travel industry has faced the toughest challenges with the Covid-19 pandemic with companies that focus on business or educational travel having been incredibly ‘hard hit’ and smaller travel firms having mostly likely used up their cash reserves during the Covid-19 lockdowns.

Although countries have eased restrictions, travel is still well below pre-Covid levels with many countries in Africa and Latin America are still not open to overseas travellers.

Official government figures that were released in September showed that in July 2021 over half, 58%, of passenger air transport and 49% of travel agency staff were still reliant on the coronavirus job retention scheme (CJRS).

‘The end of furlough is likely to compound the industry’s problems, forcing travel firms to pay the full wages of all their employees for the first time since the start of the pandemic, or make staff redundant.

‘The insolvencies we’ve seen so far are likely to be the tip of the iceberg. In many cases, furlough support has been the only thing keeping travel businesses going. Now, these firms will have to pay their whole wage bill and may find creditors knocking at the door.’

The disruption to the travel sector continues as travel to key destinations continues to remain below pre-pandemic levels, in July 2021 the industry saw air travel to popular holiday destination Mallorca down 40% on 2019 levels according to figures from the airport operations company Aena.

Travel sector representative group Association of Independent Tour Operators (AITO) has claimed that previous Government policy made problems worse with frequent changes to the green, amber, and red travel lists. The requirement of Covid-19 tests also added to

To further compound the difficulties that travel companies are facing, the Travel Association (ABTA) can increase the level of bond required if they are concerned that a travel company is suffering losses or poor performance Mazars states that the increased bond puts further pressure on cash flow for a struggling business.

Mazars also says that the end of the ban on winding up petitions on 1 October means that travel agencies who owe more than £10,000 may face demands to pay up or be wound up with the firm expecting the figure to continue to rise over the next year.