Consumer spending habits reflect a low intention to travel has been saved
Consumer spending habits reflect a low intention to travel
As the UK gradually emerges from lockdown, and the transportation industry begins to recover, consumers remain reluctant to travel. Consumers trust and confidence in the industry has been shaken, so corrective steps will be critical to recovery.
Predictably, travel is not high on the list of priorities for UK consumers, as uncertainty persists. Outside of health and financial concerns, rules on mandatory quarantine, lack of clarity on safety measures, international movement restrictions, health monitoring policies and less than optimal experiences with cancellation and refund policies, all deter potential travellers.
When we initially started tracking consumer spending patterns in mid-April, we saw a -63% negative net spending intent for the travel category, which indicated that UK consumers do not plan to spend on the category over the next four weeks. However, in the surveys that followed, results showed that the spending intention on travel, has moved up reaching -40%. While remaining the lowest priority the gradual upward trend offers a glimmer of hope.
Our survey results show that amongst all modes of transport, UK consumers prefer to take rail versus other options with 16% in our first survey saying they would prefer to use rail when planning their next trip, this went up to 21%, but dropped down to 16%, only climbing back up to 20% in the fourth wave. Rail preference is likely to see further volatility as rail usage may be impacted as people adopt social distancing measures. Fluctuating trends are also seen in car rental and cruise sectors, currently the lowest in terms of preference.
Less than 21% of respondents considered leisure travel over the next 3 months, across all leisure travel components of domestic and international flights, rail or cruises and only 16% of respondents were actively looking for leisure travel deals.
After indicating an initial upward move, travel intention by air dropped back down. Only 17% of respondents are likely to take an international flight in the next three months, versus domestic flights at 11%. The adverse impact of the pandemic on long-haul air travel, is expected to be more severe and of a longer duration than what is expected in domestic markets. Whilst the movements over the period of our survey, have been relatively small, the shift in consumer sentiment in wave 3, coincided with the timing of various negative industry and government announcements.
There is a possibility of latent demand, as tickets purchased are being rebooked for later dates, planned events being deferred and a greater need to travel after an extended period of confinement. However, this may be offset by uncertainty and poor experiences faced by consumers.
Mitigating safety concerns is critical
A perception of increased risk weighs heavily on the air industry, with only 16% of respondents feel safe flying, this moved down from 21% in the second wave. Conversely, the previous wave saw an upward climb of three percentage points from 18%.
Transport networks are is likely to need a solution for safe travel that addresses two challenges. Firstly, it must give Governments confidence that they are taking measures to limit the spread of the virus further. Secondly, it must give passengers confidence to travel safely and hassle free.
The industry is trialling new methods of testing passenger health and ensuring safety. The railways have implemented social distancing seating restrictions and sanitation protocols, while airports are testing new technology which includes ultraviolet sanitation, facial recognition with thermostat reading technology at immigration halls and contactless security procedures, etc. Airlines are reformulating routes and services as well as balancing safety protocols with the passenger experience. Other considerations include the use of the middle seat on aircraft, mandatory face masks and gloves, the cessation of on-board food services and cabin air recirculation rate indicators.
Industry under intense pressure
In the UK, the pressure on the transport network shifted from moving people to keeping a core system operational for essential workers and cargo. Transportation operators also faced a sudden change in sources of revenue with many experiencing financial constraints. The industry focused on operations and cost management, with stressed operators continuing their efforts to secure investment and push for Government intervention. Travel agents, tour operators, airlines, airports and cruise lines all face practical challenges and an extended recovery period compared to some other sectors. The ending of the furlough scheme will be a challenging point for the sector in a period where recovery is still at an early stage.
The road to recovery is not straight
While the road to recovery will be arduous there are some mitigating factors with the UK Government pumping in fiscal stimulus and continuing to assess the needs of businesses. The Government also promises to review quarantine requirements regularly and are considering exempting travellers from countries with a low COVID-19 infection rate under a network of “air bridges”. Neighbouring countries are re-opening borders with no quarantines and airlines are gradually restarting services. Nevertheless, there will be a critical period where Government support will be withdrawn and sales will not yet have rebounded. Transport providers will need to continually observe the needs and changes in consumer behaviour and fine-tune its plans accordingly.