Travel companies have raised concerns about the potential implications of Brexit on their ability to do business. While most investors in the sector are still uncertain about the future of their businesses, there are fears that the Brexit is likely to put more than 25,000 jobs in the industry at risk. In fact, recent reports seem to suggest that holiday prices may go up in the short to medium term. So, how will Brexit affect the travel industry?
Right To Roam And Fly
Initially, UK citizens had the right to enter an EU country without a visa but this could change as they may now require individual visas to travel to EU countries. This means that UK passport holders will now join the usually slower non-EU queues at airports and seaports. UK airlines right to fly may also be affected as they will no longer enjoy open skies that enable them to fly freely between EU countries. Brexit means that the UK will quit the Single Aviation Market hence they will have to negotiate separately with each EU country. However, the UK may join the European Common Aviation Area (ECAA) like other non-EU members Norway and Iceland but unfortunately, this will also have to be negotiated.
Travel companies often have to buy and sell currencies and a weak Pound will mean that the cost of holidays as well as profit margins will be affected. While many travel companies buy currencies in advance to protect their budgets from changing every month, the impact of Brexit is so huge that these companies may have to issue surcharge invoices to cushion themselves from the losses. Companies offering price guarantees will suffer while some will fail as a result of cancellations. The currency volatility caused by Brexit means that travel companies will have to price their future trips based on an assumption of what the exchange rate will be at that time. This could mean higher prices for holidays and low profit margins. This may eventually stress travel company owners leading to job losses.
Higher prices will result in lower customer numbers which also means greater competition and lower tax receipts for the government which will result in higher taxes. But a weak pound will also make room for more foreign visitors such as Americans and Europeans looking to book their cheap holidays to the UK. This is not entirely a bad thing for the local tourism industry.
There are also concerns over the legality of UK workers deployed in Europe and vice versa. Most people want to know whether they will need work permits or visas and whether UK training standards will be acceptable in Europe and vice versa. The travel industry still exists amid many challenges and the Brexit could even make it more difficult for company owners in this sector to come up with any useful strategy. There will be no definitive way of taking their companies forward but everyone is waiting to see what the future holds for this industry. Some companies may opt to downsize but the innovative ones will try to create some competitive advantage.
Written by Sarah McCann of MyBaggage.com a luggage delivery service based in the UK.