FINANCIAL RELIEF

_{French government aid for all business sectors during the pandemic meant fewer organisations failed than in a normal year, but the same could not be said for its travel agencies}

Barometers can be useful for predicting storms and the annual travel barometer produced by procurement consultancy EPSA with IFTM is no exception. Its most recent such report revealed that 2019’s €29.9 billion spend on business travel and expenses would fall to between 8.3 and 11.4 billion in 2020 and that the transactions handled by travel management companies operating in France had declined by between 75 and 90 per cent during the year.

Such declines were repeated across the travel sector. Paris’ Charles de Gaulle airport welcomed 70.8 per cent fewer passengers in 2020, although the start of the pandemic in March 2020 means that the decline due to Covid was actually higher.

Advisory firm Protourisme revealed that by November last year the travel agencies and tour operator sector had lost almost €5 billion and the event, congress and professional meeting sector some €10 billion.

Financial aid for Air France helped the agency sector which had been under pressure to refund flights

It was no wonder that the sector needed government support. At the end of March 2020, the French government deferred the payment of certain aviation taxes in order to help the sector. March also saw the implementation of government guarantees on commercial loans, and credit lines for enterprises with up to 5,000 employees.

In April, the government unveiled an umbrella scheme under which SMEs and corporates in France could get direct grants, equity injections, repayable advances and subsidised loans, up to a maximum nominal amount of €800,000.

The travel sector also benefited when in May the government approved a €7 billion aid measure for Air France to provide urgent liquidity to the company. Naturally this helped the agency sector which had been under pressure to refund flights which were unable to take place because of the pandemic.

In June, millions more in furlough support was given to a number of sectors, including hospitality and tourism. It failed to save everyone.

According to Altares, the number of businesses that failed in France during 2020 was 32,814, down 40 per cent on the previous year and the lowest number for 30 years, suggesting that government support had saved some of those that would previously have gone to the wall.

Yet the same could not be said of the travel agency sector: 3.1 per cent more travel agents failed than in a 'normal' year, revealing the depth of the crisis.

The survey said a permanent fall in the volume of business travel of up to 50 per cent could not be ruled out

GDP plummeted by 8.2 per cent in 2020, with the decline in the second quarter as the pandemic hit being the fastest fall in France’s history. It was also one of the hardest hit of the advanced economies, with only Spain, the UK and Italy faring worse.

Yet there is only one direction to go from that low baseline and the French economy is set to grow by 5.8 per cent in 2021, according to the International Monetary Fund.

There are concerns, though. The EPSA-IFTM survey said that the most likely outcome would be for a return to normal by 2023 but that a permanent fall in the volume of business travel of up to 50 per cent could not be ruled out. Some 38 per cent of those surveyed believed that the replacement of business travel by videoconferencing would be a long-lasting trend.

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