Following the UK’s June 23 vote to leave the European Union (EU), IATA said preliminary estimates suggest UK air passengers could decline 3%-5% by 2020, following an expected economic downturn and predicted falling British pound sterling (GBP) exchange rates. Link
IATA DG and CEO Tony Tyler said “it is critical that whatever form the new UK-EU relationship takes, it must continue to ensure the common interests of safe, secure, efficient and sustainable air connectivity.”
“There were 117 million air passenger journeys between the UK and the EU in 2015,” Tyler said in a statement. “Air links facilitate business, support jobs and build prosperity.”
IATA released an evaluation of the impact of the “Brexit” on UK Air Transport, noting that considerable uncertainty remains regarding the details and precise timeframe for the exit, which could take two years or longer. “Prolonged uncertainty will influence both the magnitude and persistence of the economic impacts,” IATA said.
“The near-term impact on the UK air freight market is less certain,” IATA said,” but freight will be affected by lower international trade in the longer term.”
With falling exchange rates, the UK could see an influx of international leisure and business travel, as prices in the UK will be appealing for foreign travelers.
“The weaker pound has immediately made outbound trips for UK inhabitants more expensive (because a given amount of GBP will now buy less goods and services overseas),” IATA said. “At the same time, for overseas visitors to the UK, their local-currency earnings will now stretch further than they did previously.”
Aviation policy freedom will be a major challenge for the coming negotiations.
“Along with other Member States, the UK is currently subject to a wide range of European legislation covering all areas of the aviation business from rules affecting safety and security, to consumer protection, the environment, economic regulation and beyond. A primary motivation for proponents of Brexit has been to free UK policymakers from what they see as the straitjacket of European rules and regulations,” IATA said.
“However, while the UK will almost certainly lose influence over decision-making emanating from Brussels; depending on the nature of future UK-EU arrangements, it may still be subject to most or all European legislation affecting the aviation sector.”
A possible future path for the UK aviation sector would be membership in the European Common Aviation Area (ECAA).
“Membership of the European Common Aviation Area would provide the most straightforward avenue for continued access to the Single Aviation Market, which extends access to the single market to a range of non-EU members,” IATA said. “However, membership of the ECAA requires acceptance of EU aviation law across all areas, thus severely limiting the UK’s policy freedom. The same would apply to regulations more generally if the UK were to join the European Economic Area. For example, the strongest legal impediment to airport expansion comes from EU local air quality rules which would still apply to the UK if EU membership were exchanged for EEA membership.”
“Beyond Europe, other air services agreements would need to be negotiated to ensure continued access to markets as important as the US and Canada among others. However, ECAA members Norway and Iceland are both parties to the EU-US agreement despite not being in the EU, so this would likely be a scenario that the UK could look to replicate,” IATA said.
EU referendum: industry reacts as UK votes leave
British Airways parent company IAG has warned it no longer expects to match last year’s profit increase due to yesterday’s vote to leave the EU.
In a statement the company, which also owns Aer Lingus, Iberia, and Vueling, said in doesn’t expect the decision to have a large impact long-term but short-term it will hit profits.
“IAG believes that the vote to leave the European Union will not have a long term material impact on its business. In the short term, however, in the run up to the UK referendum during June, IAG experienced a weaker than expected trading environment.
“Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015.”
Amex global business travel (GBT) UK general manager Jason Geall said: “The EU, the UK and our sector are now facing a period of uncertainty. There will be a prolonged period of negotiating the UK’s exit from the EU, during which time we expect conditions for travellers to remain the same. It is now incumbent upon travel management companies to help customers navigate through this period of uncertainty and to simplify any complexity that arises from the separation.”
Easyjet said it’s confident the result will not have a material impact on its long term growth plans and returns to shareholders.
It said it has prepared for this eventuality and has been working on a number of options that will allow it to continue “flying in all of its markets”.
CEO Carolyn McCall said: “We remain confident in the strength of Easyjet’s business model and our ability to continue to deliver our successful strategy and our leading returns.
“We have today written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers.”
Bmi regional CEO Peter Simpson said the vote has created “a lot of uncertainty” about the future of the UK, the EU and Europe as a whole and its base as a UK airline “may have to be reviewed”.
“For a business such as Bmi regional, being heavily influenced by the freedom of trade and traffic, this uncertainty will undoubtedly add a layer of complexity to our business.
Bmi regional will keenly monitor developments over the coming weeks and months to assess the challenges and opportunities they will create for the business. It is, however, safe to say, that our continued business domicile as a UK entity is less than clear at this point in time.
Any decision regarding a move to another domicile will not be taken lightly and will be carefully considered. Ultimately, the best interests of our customers, employees and shareholders will guide that decision.”
Travel trade organisations ABTA and ITM both said we are now “undoubtedly” moving into a period of uncertainty.
ABTA said: “Once the UK formally notifies the EU of its intention to leave, the remaining Member States will have up to two years to offer the UK a deal for a future trading relationship. This period can also be extended if all parties agree.
“We started this process some months ago, with a programme of engagement with ‘leave’ campaigners in Westminster, and we have prepared a detailed list of policy and regulatory priorities that we will be discussing with leading policymakers in the coming weeks.”
ITM CEO Simone Buckley said: “The UK travel management community now faces a period of uncertainty. ITM and its members will now be focused on the potential ramifications of Brexit to the managed travel sector and we will be prepared to advise and facilitate the education of the implications to the industry.”
Ryanair is doing a Brexit sale – £9.99 one way flights
Simon Robb for Metro.co.uk
Friday 24 Jun 2016
It should come as no surprise that airlines are in a fluster as holidaymakers are forced to splash out more for foreign currency thanks to Brexit.
Ryanair clearly isn’t wasting any time as it launched a 24-hour seat sale for 1million passengers in wake of the referendum outcome.
That aside, can we also draw your attention to Ryanair’s new mascots. Some Photoshop pro has superimposed the heads of Brexit boys Nigel Farage, Boris Johnson and Michael Gove onto three monkeys. Using the tag ‘See no Europe, hear no Europe, speak no Europe’, the airline is giving despondent Remain voters a chance to escape for a few weeks and let the devastating news sink in.
Seats for hundreds of destinations are up for grabs from £9.99. But it’s only one way, so this might be a hint – bail while you still can.
But don’t do anything hasty, you may be up against a few other obstacles on your travels. Earlier this morning, a resort in Greece told holidaymakers it would not be accepting British or Scottish sterling for exchange. Blue Lagoon Resort in Cos Town said it will not touch any British money until it has an official exchange rate from the central bank.
Early decision on a new south-east runway thought unlikely, due to Brexit and Cameron resignation
There is much speculation and uncertainty about what will happen on the runway situation, and whether – or how much – it will be delayed. A leak was inadvertently made to PoliticsHome on 22nd (not intended to go out till after a Remain vote) indicating that the government would make a runway announcement on 7th or 8th July. That now seems very unlikely indeed. Heathrow put out a bland statement, realising that the rapid decision in their favour is not looking likely, and making out that their runway is of great national importance. Nobody knows what future role Boris may play, but he promised in May 2015 to “lie down in front of bulldozers” to stop a Heathrow runway. Gatwick is no more likely to succeed. There are also fears for infrastructure projects like HS2,and future investment in other rail services. In short, there is immense uncertainty about almost everything. Many of the UK’s rail franchises are controlled and operated by European state-owned companies from Germany, the Netherlands and France. What happens with them? Business likes to plan ahead, and does not like uncertainty or being in limbo. The extent to which air travel will grow in future is now in doubt, with a recession likely – and UK air passenger numbers fall in recessions. The weakness of the currency will make many foreign leisure trips more expensive for Brits.
Simon Calder: What does Brexit mean for British tourists travelling to Europe?
With Britain, somewhat unexpectedly, voting for Brexit there may be changes in the way airlines operate between the UK and the EU, and there may be other implications for air travel from currency changes. Simon Calder, in the Independent, sets out some of the issues and what might happen. The exchange rate of the £ against the $ or the € may not only make holidays, to the EU or elsewhere, more expensive – but an increase in the price of jet fuel could happen if the £ weakens against the $. Through the “Open skies” agreement, since since 1994, any EU airline has been free to fly between any two points in Europe. This allowed easyJet and Ryanair to flourish, and forced “legacy” carriers such as BA, Air France and Lufthansa to cut fares. The UK may have to negotiates a similar arrangement to Norway, within the European Economic Area (EEA), in which case little would change. But if Britain does not join the EEA, every route between the UK and the EU might need to be renegotiated on a bilateral basis. The bureaucratic logjam would be immense. Similarly, British Airways and Virgin Atlantic have easy access to America because of an EU-US treaty on open skies. The freedom for British airlines such as easyJet to fly within and between EU countries could be curtailed; nations such as France and Italy have in the past been protectionist of their home airlines. And much more …..