Preparing for uncertainty following Brexit in the Travel and Aviation sector
Flying through the clouds
A report exploring the impact of Brexit on the travel & aviation sector
The outcome of the UK referendum on EU membership signals that there are likely to potentially be big changes ahead for the UK economy and the aviation and travel sector.
While March 2017 has been flagged as the date the exit process is likely to start, the exact timelines and priorities are still being defined. The industry is wondering how best to respond to the growing uncertainty over its future.
Much of the debate on what the terms of exit could or should be is taking place at a very high level. But businesses want to know the detail on what to expect in order to plan ahead.In addition, it is very important that the aviation and travel industry gets involved in the debate when it comes to renegotiation.
Why might Brexit be significant for the UK and global aviation industry?
- Aviation and travel are global industries which are influenced by international trade and politics. Any major changes relating to regulation, trade or politics is thus likely to have an impact on the dynamics of these sectors globally.
- The outcome of the UK referendum has created uncertainty over how the UK and the EU aviation sectors will continue to operate and collaborate in a mutually beneficial way. After the UK leaves the EU, the UK aviation sector could see an overhaul which may require significant changes in the way it operates.
Considerations for airlines and travel companies in relation to Brexit
- Airlines and travel businesses should adopt a sensible approach to planning which would include a thorough analysis of the relevant risks and opportunities that are emerging specifically for their organisation before, during and after the exit takes place.
- In this process businesses should consider a range of different aspects, including; Economic and Financial, Regulation, Corporate Governance and Strategy, Operational Strategy, and the Consumer and Customer Relationships.
What the industry needs to consider when planning short, medium and long term
- Short term - the immediate effect on air traffic as well as revenues in the industry will be governed largely by foreign exchange volatility.
- Medium term - when the terms of exit become clearer, regulatory and operational issues could become more pertinent considerations. Airlines and travel companies might need to take strategic decisions on the best course of action for them, especially when addressing the likely future inflationary pressures on the industry’s cost base.
- Long term - strategies for operations, consumer protection and other regulatory matters as well as customer relationships will have to be considered.