Brexit & Business Travel
It’s probably still too early for anyone to make any especially accurate predictions about the likely impact of Britain’s departure from the European Union, but that won’t stop experts speculating and everyone wondering.
At the time of writing, Article 50 of the Lisbon Treaty has yet to be triggered, Sterling has hit a 31 year low and our new Prime Minister has barely had time to do much except appoint a new cabinet, while some commentators are even speculating that a full Brexit might not happen at all, there is bound to be some fallout. Already we've seen the unfortunate, sudden demise of Low Cost Holidays being blamed on Brexit.
On the flipside, some business are poised to capitalise on the fluctuation of the pound and make short term gains from exports and we may see an uplift in business travel as many frantically companies seek to make deals before any decisive action is taken by the Government.
At this stage few things are certain, except that British travellers will need new passports and can look forward to longer queues at European airports. Trade body UK Inbound have expressed concern at the outcome and are seeking assurances from the Government over the £22 billion of inward investment.
The Business Travel Industry View
Most business travel bodies have been reticent about making any official comment so far, but when pressed by Buying Business Travel, Graham Ramsey, Chairman of our trade body the Guild of Travel Management Companies (the GTMC) has said ‘I don’t think we know what the impact is going to be, but I cannot see any positives from the business travel point of view. My instincts tell me we will see no benefit in terms of corporate travel or business travel generally.’
The deregulation of flight prices introduced by the EU nearly 20 years ago has certainly benefitted SME travellers and there are fears that British travellers will soon be locked out of the low-cost carrier party. Budget airlines will certainly be keen to lobby for Open Skies agreements stay intact.
Easyjet are predicting a slump in profits and are reportedly in talks with other EU nations about relocating their HQ away from the UK, while Ryanair’s Michael O’Leary, never one to shy away from a publicity opportunity, vigorously campaigned for remain and will almost certainly choose a base outside of the UK.
While we wait for the political dust to settle and for the pound to gradually stabilise it’s expected that most companies will take a conservative approach to their budgeting, tightening their belts wherever they can, and travel expenditure is likely to be a prime target. Corporates might want to revise their travel policies accordingly and restrict individual spending limits and exercise greater control over their staff travel in Europe and beyond.
Flight routes largely supported by Britain’s 30,000 strong community of expats living and working in Brussels are inevitably at risk, such as East Midlands to Brussels.
Similarly, Eurostar who have already been feeling the pinch in the aftermath of this year’s terror attacks in both of their two primary destinations, may have to do more to cater to business travellers, and offer incentives like their special ‘lucky dip’ £25 fares aimed at consumers.
Increased Focus on Non-Euro Markets
With trade deals in established EU markets uncertain, businesses might turn their attention towards emerging markets outside the EU.
Gatwick or Heathrow Expansion?
The decision over which of London’s airports to earmark for expansion is now going to be held over to David Cameron’s successor, with both Gatwick and Heathrow going all out to make their cases over the coming months. The decision over airport expansion has been hanging in the balance for a while but perhaps Brexit will focus the issue and expedite a resolution.
Heathrow received a “unanimous and unambiguous” recommendation for expansion from the independent Airports Commission in 2015. The report said the airport had the greatest economic benefits that were distributed across all of the UK.
While Gatwick have reported their busiest year ever, with over 40 million passengers using its 50 long haul routes. So far various politicians have made statements regarding a decision on London’s airport expansion plans - and the new Transport Secretary Chris Grayling has just reaffirmed the Government’s backing for the HS2 High Speed rail project which could have a bearing on the decision - but how these will now shake out is anyone’s guess.
Four our part, we’re committed to working with the evolving situation as best we can - and continuing to help our many diverse clients, from owner operators to public sector bodies and multinational companies get the best insight and value from their business travel spend.
Our MD Jackie Lacey says: ‘The country has spoken, let’s now hope that Government can unite and set us on a new path of prosperity. Important decisions need to be taken, specifically on the expansion of our airports. The UK needs to compete with its global partners and create an infrastructure that can support our businesses and their need to travel to ensure the future growth and success of the UK economy.’