Ian Taylor gives five reasons to book with confidence
A dramatic week in British politics left the industry with no more immediate clarity on Brexit than before and businesses contemplating three possibilities.
One remains Britain crashing out of the EU with no deal on October 31. The odds on this have reduced considerably but it could still happen.
A second is Britain leaving on October 31 with a ‘new’ deal secured by the October 19. This is unlikely in the extreme.
The third and most likely alternative is a new leave date of January 31, which could itself lead to several further possibilities ranging from no deal through to no Brexit.
How events settle beyond that will depend on the outcome of the general election which now seems certain before the year is out.
There are two immediate points of contention. First, when will the election be, October or November – before the current leave date or after?
Second, will prime minister Boris Johnson accept the humiliation of asking the EU to postpone Brexit, a move he has expressly ruled out, or refuse and defy the law.
He has so far insisted he will do both – refuse and respect the law – but not said how he will do it. This is classic Johnson.
His eggs are all now in the October election basket and it is likely he will see those smashed on Monday since no MPs opposed to no deal trust him to keep any kind of promise.
Brexit and booking patterns
Former Abta chairman Noel Josephides, the chair of Sunvil, warned this week that a January leave date would be “really problematic”.
“The industry needs a booking pattern,” he said.
Departing the EU in summer 2020’s peak booking month would not be ideal. But doing so with a deal and clarity on arrangements would be preferable to no deal at the end of October.
The government’s own assessment of the impact of no deal is of a minimum three-months’ chaos at Dover to say nothing of medicine and fresh-food shortages – unlikely to boost consumer confidence in booking a summer holiday or a New Year ski trip.
An election could render the point academic, depending on the result. The date could move again or disappear if the Tories lose office and a new government reposes the Leave-Remain question. There are a great many ‘ifs’.
I’m not convinced people will be deterred by the uncertainty from booking summer holidays abroad. The issue will be when people book.
But so much is unusual at present, it would be a lot to expect travel booking patterns to fit a historical template.
The industry needs a pattern it can recognise, of course, in order to plan capacity and budgets.
The sensible thing would be to rein in expectations, show caution on capacity and remove the excess that has trashed yields in the short-haul market. Even Ryanair has recognised the necessity of doing this to an extent.
Reasons to be cheerful
Amid the political turmoil there were reasons to remain cautiously upbeat this week. Here are five of them.
First, the EU extended the deadline for its no-deal contingency arrangements for UK-EU flights to October next year, or pretty much the whole of the summer season.
That removed fears that existing arrangements would end with the winter season. It ensures flight schedules will be unaffected by no deal for as far out as schedules are available. People can book without fear of cancellation due to Brexit.
Second, the government was forced to retreat on a pledge to end free movement for EU nationals immediately following a no-deal departure.
Home secretary Priti Patel had to revert to the previous plan to grant all EU nationals entering the UK between the planned leave date of October 31 and the end of 2020 a three-year temporary leave to remain.
That resolved the immediate uncertainty for new arrivals and for EU nationals already here who may have had to prove they had not just arrived.
Third, Eurotunnel declared it is “ready for Brexit”, assuring those booking Eurostar and Shuttle trains: “There will be no change to immigration formalities.”
Of course, Eurotunnel can’t do much about the truck congestion on the M27 that would prevent travellers reaching the Tunnel in the event of a no-deal Brexit.
This is likely to be the single biggest travel-related issue caused by a no deal departure.
Fourth, Greece appeared ready to follow Portugal’s lead in making special arrangements at airports to facilitate the entry of UK visitors in the event of no deal.
This would mean no entry at EU airports via EU passport lanes, causing delays that could make flying to somewhere as flush with UK arrival as Palma de Mallorca a pain.
It would mean an education for many in how worldwide arrivals to Heathrow feel, of course, but that is another issue.
Finally, Jet2 chief Philip Meeson signalled exactly the kind of caution the industry needs to exhibit in a trading update.
Meeson, who is executive chairman of Jet2 parent Dart Group, noted “overall demand” for summer 2019 had “continued to strength” but “winter season bookings have yet to match our seat capacity growth”.
The company’s board, while “optimistic”, therefore remained “very cautious” in looking ahead.
How to clear the logjam
Recent days have seen some magnificent political theatre. The business newspaper the Financial Times noted: “Rarely has a British prime minister’s strategy imploded so rapidly.”
In two days, Boris Johnson became the first PM in 125 years to lose his first vote in parliament and saw MPs force him to take a course “he had categorically ruled out”.
Johnson’s attempt to corral MPs “collapsed his working majority from one to minus 43” and saw him sack 21 ‘rebels’, “including two former chancellors”, leading his party “to the brink of an historic split”.
An election “with the Conservative party shrunken to an English nationalist rump” now looks inevitable.
Johnson could turn out to be “either the UK’s shortest-serving prime minister or the man who broke the parliamentary logjam to deliver Brexit”.
Labour leader Jeremy Corbyn is expected to resist the temptation of an October election in favour of November, with Johnson’s opponents figuring the PM will be seriously hurt by not delivering Brexit on October 31.
The Tories could then haemorrhage votes in two directions – to the Brexit Party and to the Lib Dems, making a Labour or anti-no deal Brexit coalition government likely, along with a second referendum.
We shall see. An associated but ultimately bigger issue faces the sector – not just in the UK but across Europe – and that is the recession now almost certainly upon us.
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