What Brexit means for the future of the UK aviation industry
Adam Ewart, CEO and Founder of Send My Bag, provides his insight on what the future of the UK travel industry will look like in the wake of Brexit.
True to his promise, Boris Johnson ‘got Brexit done’ and the UK left the European Union on 31st January. Since the referendum result, the business community has collectively been holding its breath. And while it’s not time to exhale quite yet, there are already some tangible changes Brexit has brought to British industries, across a range of sectors.
Where travel is concerned, Brexit has added another challenge to an industry already shaken up by the recent collapse of Thomas Cook and a near miss for Flybe. Throughout the sector, price hikes are common, particularly among “budget” airlines whose profits have been hit by rising fuel costs and Sterling weakening further in recent years.
But it’s not all doom and gloom. Brexit will no doubt bring changes to the UK’s aviation industry, but some businesses and consumers also stand to benefit.
Ongoing opportunities in the UK
The future of free movement, and how much it may or may not be limited, will play a major role in people’s travel plans in the future, and particularly students and holiday-goers could be affected. Depending on the changes put in place, it is easy to imagine that low budget airlines like Ryanair, which operate mainly routes between the UK and countries in the European Union, could be hit if new red tape, such as visas, are introduced making holiday travel to European countries more difficult. But it is hard to believe this would fall away so significantly that airlines would need to rethink their business models.
A recent vote in Parliament also determined that the UK’s inclusion in the Erasmus+ programme will not be part of the ongoing trade talks at the moment. While the impact on aviation doesn’t seem immediately obvious, a 2018 Higher Education Policy Institute report found that international students are worth £20 billion to the UK economy - with a significant portion of this going to the travel industry.
For many travel companies, it will therefore remain paramount that Britain remains as open as possible for students and travellers from around the world. No matter what happens to the Erasmus+ programme, the fact remains that after the US, the UK remains the second most popular destination for students worldwide. Given the accessibility of English as an academic language, and the high international ranking UK universities have, this is unlikely to abate even in the absence of Erasmus+. Before anything is decided, the travel industry should ensure that contingency plans are in place regardless – whether that’s pushing for an alternative to Erasmus or exploring additional revenue streams.
A bump for business
There are also many obvious opportunities for businesses and workers in the UK going forward, which will mean the UK will remain an attractive destination for people to work and travel to. Recent reports show the UK tech sector is thriving right now, with over £10 billion investment into British technology start-ups last year – a record high for a sector that’s continuously been making progress. This is a sign of confidence in the entrepreneurial landscape in Britain, that will continue to attract employees from European countries and beyond.
Now that the Home Office has also unveiled plans for its new immigration policy, the uncertainty that may have kept those planning to set up a business or join a different company at bay will ease. The UK is clearly committed to attracting both businesses and skilled migrants, so Brexit could give a real bump to business travel in the long term.
Travelling in the other direction, a report by the Institute of Directors last year found that one in three UK firms is planning to relocate post-Brexit, with many big businesses in particular eyeing Paris, Frankfurt or Amsterdam. As a result, senior executives from the UK may have to travel more for meetings on the continent, which could give a lift to airlines supplying these popular routes. Depending on frequency of travel, airlines should look to promote their business travel offering in the coming months. This could be a strategy to mitigate potential losses from holiday-goers and offer more premium products.
Business relocation will also play a significant role in supporting the air travel sector post-Brexit, amid a rising trend for “digital nomads” and businesses seeking to capitalise on high growth economies internationally. In the coming months, the sector could also see a bump as a number of expats make the move either from or to the UK ahead of the transition period ending in December to secure freedom of movement rights. Airlines may want to consider how they can capitalise on this business by offering competitive flights and service for potential expats.
Adapting to a new normal
From a political perspective, everything will largely continue as normal for the next 11 months while a final trade and exit deal is agreed between the UK and EU. The devil will be very much in the detail on how talks go with the European Union, so in the meantime, any pressures on the travel sector posed by Brexit will be mitigated to an extent - but businesses and consumers must start preparing for 2021.
Budget airlines who mainly service Europe should use this opportunity to review their business models. What we don’t want to see is low-cost carriers trying to recoup potential losses by continuing to pass on their rising costs to the customer. With a model like Ryanair’s, that doesn’t even recover transport costs with its average fare, so the key to this will be ancillary revenue. Charges for bags and extras on the plane already now make up nearly 30% of the airline’s total revenue. If this increases post Brexit, it could raise serious questions from consumers looking for holidays.
Offering sustainable, customer-friendly air travel is a goal that the whole industry needs to work toward together – Brexit or no Brexit. In the meantime, we need to watch the developments of the talks closely, and review strategies to suit the UK traveller of tomorrow.
About Adam Ewart
Adam Ewart, CEO and founder of Send My Bag, an international luggage delivery service.
After being slapped with a £50 excess baggage fine, Adam decided to broker deals with various international logistics companies for cargo space before establishing Send My Bag in 2010. Since then, the company now ships over 250,000 bags each year and operates in 150+ countries across more than 10,000 routes worldwide. The company also recently won the Queen’s Award for Enterprise.
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