UK air travel could fall by as much as 5% by 2020 following Thursday’s vote to leave the European Union.
The forecast was issued by Iata and came after British Airways parent company International Airlines Group issued a profits warning wiping more than £2.5 billion off the value of the company due to the referendum decision.
Iata said preliminary estimates suggest that the number of UK air passengers could be 3%-5% lower by 2020, driven by the expected downturn in economic activity and the fall in the sterling exchange rate.
The sector also faces a big issue over 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, according to the airline trade body.
“Considerable uncertainty remains regarding the precise detail of the exit and it could be two years or more before these issues are fully resolved,” Iata said, adding that “prolonged uncertainty will influence both the magnitude and persistence of the economic impacts”.
Iata director general and chief executive Tony Tyler 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.”
Meanwhile, the trade continues to digest the impact of the referendum vote.
Thomas Cook was forced to suspend its ‘click and collect’ foreign exchange service until today over fears that its branches may run out of cash as consumers sought to secure the best value before the plunging pound hit exchange rates.
Paul Waters, director of Premier Travel, which has branches throughout East Anglia, said: “Many European countries rely on visitors from the UK and it will, therefore, be in their interest to find ways to maintain existing relationships.
“In time, there may be implications for people who enjoy an annual summer holiday in popular European destinations once our exit has been negotiated; for example, there could be less compensation for delayed or cancelled flights – which are currently protected by EU regulation – fewer health benefits abroad and an impact on data roaming charges, as well as unlimited shopping allowances. However, these are not likely to change in the short term.
“There is no doubt that we are moving into a period of uncertainty and it will take time to understand how this might impact on travel to Europe.
“However, the British public are resilient and see their overseas summer holidays as an essential part of life and we believe that they should remain confident in the immediate future, that it will be ‘business as usual’ for holidays to EU destinations.”
Allan Lambert, managing director of domestic operator Blue Chip Holidays, said: “We have to accept that after nearly 40 years of playing an active role in the European Union we’re heading for the exit.
“It’s clear that there is a great deal of disappointment from our European neighbours and that will undoubtedly damage Brand GB.
“A weakened pound versus the euro may in the short term make the UK look more competitive, but we shouldn’t underestimate the loss of appetite from European guests who will now see the UK as an unhospitable destination.
“This, coupled with economic and political uncertainty will mean that many Europeans will choose to holiday closer to home this summer. Conversely, UK travellers may feel that holidaying in Europe is now further out of reach financially.”