Andy Cooper, chief executive of Owens Cooper Consulting, considers the claim that the travel industry is poor at fighting its corner with governments
It seems to be a generally accepted axiom that the travel industry is not great at influencing governments. Over the past few months, I have found myself considering that claim in some detail. Here are my thoughts.
As an initial point, we really need to identify what any industry can expect to achieve when it tries to influence governments. Are we going to get legislative change to reflect our interests, issues and concerns? Or more realistically, is the best we can hope for to discourage governments from making changes which damage our industry?
It seems to me that there are three key questions that need to be answered:
- Is the travel industry poor at lobbying and influencing governments?
- If so, why should that be?
- Most importantly, if it is true, what can the industry do to make itself heard more effectively by political decision makers in particular?
The case for the prosecution
Those who believe that the travel industry cannot influence governments effectively will normally refer to a number of examples. In particular, they will cite:
- Air Passenger Duty. Despite a mass of evidence to suggest that rates of APD in the UK have a damaging effect on total air travel, successive governments have declined to review APD, and have more typically increased the tax rates, adding to the burden on the UK aviation industry. This significantly underplays the benefits for the UK government of APD – it is an incredibly cheap tax for them to collect, as all their work is done by airlines; and it raised over £3 billion in 2013/14. If it were abolished, government would need to replace that revenue, and Treasury officials think like most accountants, and want money in their hands, rather than hypothetical benefits which would result from abolishing the tax.
- Flight delay compensation. The aviation and tourism industry faces significant financial burdens as a result of the 2009 decision in Sturgeon v Condor Flugdienst. Despite the industry lobbying both national governments and the EU to change this, progress on reform is very slow, and is still likely to result in airlines being obliged to pay compensation to delayed customers. This view ignores the fact that the obligations to pay compensation have been entirely created by Judges, and not by legislators, and those judges are not susceptible to lobbying. Furthermore, Members of the European Parliament, who can influence this issue are probably the world’s expert aviation consumers, as most of them fly twice or more often every single week. As consumers, they believe that they should be entitled to compensation for flight delays, and do not see the bigger picture.
- Airport capacity in the UK. Most experts agree that there is, and has been for a number of years, a critical shortage of aviation capacity in the South East of England. However, successive governments have failed to tackle this, and indeed both parties in the Coalition had manifesto commitments in the 2010 elections not to allow expansion at Heathrow. However, the political issues, with a conflict between voters’ perceived entitlement to quiet enjoyment of their own houses and businesses’ and individuals’ desires to travel shape this debate to a massive extent. Like it or not, travel in general, and holidays in particular, is seen, and will continue to be seen as a discretionary activity.
It is interesting that all these examples involve aviation, and the airlines are also actively involved in lobbying activity. Despite that, failure to achieve positive change in these areas is frequently blamed on travel industry failures to lobby successfully. However, if we are applying the test of preventing changes which could cause even more damage to our industry, then it may be that we have not failed at all.
Why is the travel industry not always successful at lobbying?
For me, there are some important factors at work here.
- Resource. If you look at the industries which are generally regarded as successful at influencing governments, those industries generally dedicate significant resources to lobbying. In the USA, a body called the Center for Responsive Politics estimates the annual spend on lobbying by different industries and sectors. They calculate that the pharmaceutical industry spent $2.894 billion in 2013 on lobbying – wow!! By contrast, lodging and tourism bodies spent $6.35 million and Airlines spent $18.89 million in the same period. Whilst the numbers are far smaller in Europe and the UK, it would not be surprising if the proportions were very similar. Put simply, the travel industry makes very little money, and regards lobbying as a luxury, which it barely resources. In this, as in many subjects, you get out what you put in, and as an industry, we cannot expect much, beyond trying to maximise our return on investment.
- Disjointed nature of tourism. Put simply, tourism covers many issues and many subjects, which often have little in common. I once attended a meeting organised by DCMS for the tourism industry, where I, representing the outbound sector was sat next to the head of the trade association representing the portable toilet industry. Don’t get me wrong, portable toilets are essential for successful festivals and many other events taking place in the UK each year, but what do their suppliers have in common with Tui and Thomas Cook? Politicians frequently say that they would like to hear a single message from a single voice on tourism issues, but in practice that cannot and should not ever happen. We are not like farmers, producing essentially the same types of products for similar uses, and need a multiplicity of voices. What is important is to attempt to ensure that when we are talking about the same subjects, we try, as far as possible, to have the same message – but that is not always easy. A great example of this working in practice has been the Flying Matters Even though we still have APD, the industry has largely spoken with a single voice, shouting a relatively consistent message. Possibly as a result of this work, the government did simplify the banding structure of APD in the 2014 Budget.
- Power base. For any industry to be listened to by politicians, there has to be a reason for them to do so. Typically this will be because the industry’s messages have direct influence on voters. Tourism, and particularly international tourism suffers at both ends of its route. For governments in the source markets, tourism is taking money away from their economy. Whilst ABTA has done a great job in making the case that outbound tourism adds huge value to the domestic economy, this point is still not understood by politicians generally, who talk all too frequently about the Tourism Deficit as being a bad thing. Conversely, in the destination countries, whilst tourism provides massive economic benefit, the visitors are generally short term, and most importantly, do not vote. Their views therefore have little resonance with politicians in democracies, as they will not influence whether they get re-elected. This is why tourism is often at its most successful in economies where there is no democracy.
So, how do we do it better?
If we accept that we are never going to put the same level of resource into influencing governments, I think that it becomes essential for the whole travel industry to recognise that we can all play a part in making the case for the tourism industry. So, my thoughts on a few simple steps we should be taking as an industry.
- All of us can play a part. Too often, lobbying is left to the trade associations and one or two other big players. Politicians generally recognise that they are ultimately answerable to their electorate, and in most cases are very happy to see or hear from their constituents about topics more interesting than neighbour disputes, poor hospital service and so on. We should all be speaking with our local MP, and just as importantly, our local Member of the European Parliament, to make clear to them how important tourism is to all their constituents, and how many people work in the sector. By all making a noise, we can start to create a similar impact to the billions of dollars spent by the pharmaceutical industry.
- We do need clear leadership from our trade associations and those who represent our sector. We all need to understand the messages we need to use and how best to use them. Equally importantly, we need to get involved with trade associations. It is no good relying on others to express an opinion, and then complain that we don’t like that opinion. Speak out, and you will be listened to.
- We need to try to simplify messages where we can, and actually argue for the same things. We will never have a single industry voice, but if we all wanted the same outcomes on APD reform, airport capacity and other topics, we have a better chance of being listened to. To do that, once we recognise that there is an issue which affects all of us, it is incumbent on our trade associations and large players to get together, and agree basic core messages. As individual businesses within the industry, we have to encourage that to happen.
In conclusion, it’s probably fair to say that the industry could do better, but with the resources that we have and are willing to commit to this topic, we need to maximise the returns we can achieve.
This article was originally published on owenscooper.co.uk