British aviation should plan for the “worst case scenario” of life outside the European Common Aviation Area, Monarch boss Andrew Swaffield told an ITT dinner last night.
Addressing the issue of Brexit, which he said he voted against, the airline’s chief executive said he saw advantages for Monarch, an airline based in England that flies only between European destinations.
Swaffield insisted leaving the EU Common Aviation Area was not an issue for Monarch as it is for rival carriers.
He said although the ramifications of leaving were largely unknown being in has been critical for airlines like easyJet that is UK based but been able to expand across Europe.
“Simply hanging our hopes on staying in won’t wash,” said Swaffield. “You have to plan for the worst case scenario.”
Swaffield declared Monarch as being “the Brexit airline” although he said he expected aviation growth to shift away from the UK to the continent.
“Perhaps now we are going to get out it’s better to get out completely,” Swaffield said of the European Common Aviation Area. “Maybe we should be planning for a hard Brexit, whatever that means for aviation.”
After rivals Ryanair and Wizz Air announced they will focus away from the UK due to Brexit, Monarch sees an opportunity to improve yields in a less competitive sector.
However, Swaffield said consumers would not accept a reversal of the low fare environment competition in Europe has facilitated.
He said the June referendum “created almost stasis” among Monarch’s customers with the first half of the summer proving “very difficult” and described the 10% drop in the value of the pound as “bad news” but said bookings picked up after the European football championships.
However, with Sharm el Sheik in Egypt off sale and Turkey down by 60% yields in Monarch’s Spanish strongholds were hit as rivals like Tui and Thomas Cook piled on capacity.
Swaffield said a million-and-a-half seats were added on Spanish routes this summer, a 21% increase against just a 10% increase in demand. “That has depressed yields, although demand has been very good. It’s been an interesting year for us,” said Swaffield.
Monarch has seen “encouraging green shoots” of a turnaround in customer sentiment about air travel and the threat of terrorism.
Swaffield said previously 7% of customers, when surveyed, said they would not travel but in the last few weeks that figure has dropped to 4%.
“What we are witnessing is a bit of stoicism in the British mind set. People are getting a bit more used to it and saying we are going to go away anyway.”
Swaffield described suggestions of visas for British travellers to Europe as “sabre rattling” ahead of Brexit negotiations saying the EU deciding to damage UK tourism would make no sense commercially.
And he said Brexit may force the debate on new runway capacity in the southeast to a head saying aviation is “a critical lubricant of trade deals” and his personal view was there is a clear need for new runway capacity at both Gatwick and Heathrow.
“The UK may be forced to build runway capacity to support international trade deals. You may find that that argument has a bit more weight now. You need to underpin trade deals with aviation.”