The exit of Great Britain from the European Union has made a major impact in almost all the sectors. According to tourism experts, this segment will witness a significant impact. On one hand, the devaluation of Pound will make UK holidays cheaper for travellers, but there will be a lot of negative impact on the aviation space in the EU. According to reports, London may even lose out on the status as gateway to Europe.
Wego.com, one of the leading travel search sites in the Asia Pacific and Middle East, reviews the effects of the UK’s separation from the European Union means for travellers. Ross Veitch, CEO and co-founder, Wego said, “Regardless of whether you believe that Brexit was a positive or negative move for the UK, there will undoubtedly be repercussions for travellers in light of the decision. The UK Pound has dropped 9.8 per cent, with the value of the pound to the dollar at 1.3415 in early trading since the referendum result has become clear, which means a UK holiday is going to be cheaper for most foreign tourists than it has been for about 20 years. In-destination trip costs such as accommodation, dining, entertainment and shopping will allow significantly better value for the foreign traveller after exchanging their local currency.”
On the other hand the IATA chief speaks about the impact in the aviation segment. Tony Tyler, Director General and CEO, IATA said, “The Brexit vote has triggered much uncertainty—financial and otherwise. As leaders in the UK and the EU work to establish a new framework for their relationship, one certainty to guide them is the need and desire of people on both sides of that relationship to travel and trade. Air transport plays a major role in making that possible. There were 117 million air passenger journeys between the UK and the EU in 2015. Air links facilitate business, support jobs and build prosperity. 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.”
According to an IATA report, considerable uncertainty will remain regarding the precise detail of the exit and it could be two years or more before these issues are fully resolved; prolonged uncertainty will influence both the magnitude and persistence of the economic impacts. Preliminary estimates suggest that the number of UK air passengers could be three to five per cent lower by 2020, driven by the expected downturn in economic activity and the fall in the sterling exchange rate. The near-term impact on the UK air freight market is less certain, but freight will be affected by lower international trade in the longer term. A big issue is with aviation regulation. The UK faces a trade-off between accessing the European Single Aviation Market and having the policy freedom to set its own regulations.
Speaking about the impact on the Indian travel industry, Madhavan Menon, Chairman & Managing Director, Thomas Cook (India) said, “Currently travellers need separate visas for the United Kingdom and Europe and this is unlikely to change anytime in the foreseeable future. Our various businesses at Thomas Cook India, including the foreign exchange business remains fully hedged. The current volatility will not impact our core business in any way, however we will witness wide spreads in the currency trade for the short term and expect that the market will settle down and currencies will find their own levels. On our product strategy, we constantly review prices in line with the input cost and that will remain unchanged.”
Another industry expert Rakshit Desai, Mananging Director India, FCM travel Solutions and Flight Shop foresees no impact in global travel to UK till next summers. He added, “With the peak leisure season behind us, we don’t foresee very discernible impact of Brexit on global travel to UK, at least till the next summer. However, for those planning a vacation in the immediate future, the exchange rates are expected to provide for five to seven per cent savings in package costs. Also, as the British summer is still going strong, we would advise any travellers planning an international trip in the near future, to consider UK as a destination. We don’t see any immediate effect on ease of travel, since there are no changes in aspects like visa processes. It is probably in the next couple of years that any further developments on this front would play out.”
Brexit will also impact majorly in London as a global aviation hub and port of entry to Europe, as other European hubs will witness a rise in traffic due to ease of travel. “As a long-serving entry hub to Europe, London may now be increasingly challenged by other key EU hub airports such as Paris, Frankfurt and Amsterdam which will offer inbound travellers easier onward movement around EU member countries. Although it will take time, it’s likely the UK government will try to negotiate similar travel agreements to replicate those in place as a member of the EU,” said Veitch.
