Dixons Carphone plans to close its Dixons Travel business after predicting an insufficient recovery in passenger numbers.

The electrical goods specialist has made the decision to shutter the division, which historically made an annual profit contribution of £20m, as the travel industry has been decimated by pandemic restrictions and it is not expected to recover for the foreseeable future.

Dixons Travel store Heathrow

Dixons Travel operates 35 stores in airports in the UK and Ireland

Dixons Carphone said the decision was also influenced by the UK government’s removal of tax-free shopping concessions, which, coupled with substantially lower passenger numbers, made the business “unsustainably loss-making”.

Dixons Travel operates 35 stores in airports in the UK and Ireland, as well as concessions on P&O cruises, all of which will be closed.

The retailer told Retail Week discussions with airport landlords are ongoing so exact closing dates have not been confirmed.

The retailer said its 398 colleagues affected by the closures are not being put at risk of redundancy and they will continue to work in other parts of the business, including its call centres and ShopLive, until more permanent job reassignments can be made.

A Dixons Carphone spokesperson said: “Today’s announcement follows an unprecedented year for the travel industry, which has seen UK airline passenger volumes fall by 75 per cent in 2020 due to Covid-19 restrictions. 

“We are, therefore, proposing to close our Dixons Travel business. We’re confident we’ll be able to offer any of the affected colleagues who want to stay another role elsewhere in Dixons Carphone. We’re grateful to our colleagues for their continued commitment and will support them through the process. 

“Though Dixons Travel is a small part of our overall group – a group in rapid transformation to which we remain committed – and though this decision is necessary, it’s with sadness that we make it.”

Dixons recorded strong sales growth throughout the most recent lockdown with like-for-like sales up 12% in the 25 weeks to April 24, while online sales more than doubled to £4.5bn in the 51 weeks to the same date.

Due to its financial position, Dixons reported that it has reimbursed £73m of government support given to it during the pandemic.