What will Brexit mean for buyers?

Travel buyers are living with uncertainly about what Brexit will mean for them, says Megan Tatum

It proved to be an optimistic choice of lyrics by Donald Tusk. “Friends will be friends, right ’til the end,” the president of the European Council tweeted in late November, hours ahead of a meeting of EU leaders in Brussels to agree the UK’s withdrawal agreement.

The political infighting that ensued, culminating in a vote of no confidence that prime minister Theresa May survived by only 83 votes, certainly didn’t feel much like friendship.  Ever since the UK voted to exit the European Union in June 2016, relations between the UK and the EU, as well as between deeply divided factions within the UK itself, have seemed insurmountable.

While politicians have engaged in this escalating row either side of the English Channel, businesses have been left trapped in a period of unnerving uncertainty.

“It is currently absolutely impossible to know where this will land,” sums up Tom Stone, corporate travel leader at Nina & Pinta. “The uncertainty that has existed for the past 30 months is the factor that is causing paralysis.”

With the potential to affect everything from passports to visas, aviation and immigration status, to name but a few, what is certain is that the impact on the business travel sector could be immense.

As a joint paper by ABTA and Deloitte points out, 68 per cent of business visits from the UK are to EU countries, while 73 per cent of inbound business visitors are from the EU. “Tourism and travel trade between the UK and EU has been facilitated by the free movement of goods and services, investment and people across the EU,” it summed up. “A Brexit could jeopardise this free movement, and affect the flow of trade and travel.”

Watch and wait

Stuck without clarity on the nature of this impact, many travel buyers have been left, understandably, without any clear sense as to how they might prepare and mitigate it.

“I’ve seen no evidence that companies are making significant plans for their travel programmes based on where we currently are – I’m sure this will change once it is concluded how, and if, the UK actually leaves the EU,” says Stone. “We have taken a view of watch and wait until now, when we are being fed conflicting advice,” adds one travel buyer for a major marketing and branding agency, responsible for EMEA.

In the shorter term, with Parliament still yet to give approval to the withdrawal document put forward by Theresa May, there are two potential scenarios that businesses face. The first is where Parliament gives its approval to the agreement and, as expected, the European Parliament then ratifies ahead of 29 March, when Article 50 dictates the UK is out the EU.

This would see the UK enter into a 21-month transition period (with the potential for extension) that keeps freedom of movement and EU regulations in place, and allows business a hiatus within which to prepare.

Referred to by the prime minister as the “implementation phase”, she has insisted it will minimise disruption.  In other words, “if a withdrawal agreement is reached and signed off by Parliament, business travellers can breathe a sigh of relief, as nothing will change until at least the end of 2020,” says Martin Ferguson, senior director of public affairs at American Express Global Business Travel. “If we have a no-deal scenario, where the UK simply falls off the end of the conveyor belt on 29 March, it’s likely to be more problematic,” he says.

Regulatory cliff edge

That could be an understatement. Without a deal in place the UK faces a regulatory cliff edge, its existing agreements with the EU dissolved as of 11pm on 29 March. That could leave the business travel sector facing challenges in all sorts of respects.

There had been fears that British citizens would immediately require visas and additional documentation to travel to and from EU countries. Thankfully, a recommendation by the European Commission in November to place the UK on the visa-exempt list, even without a deal in place, makes that unlikely. But this remains conditional on the UK granting reciprocal rights to inbound EU travellers.

A no-deal may mean the requirement to purchase a £52 90-day Schengen visa to enter EU countries still stands, advises the GTMC. For Stan Berteloot, vice-president of global growth at Visa HQ and marketing consultant at Dots & Lines, buyers should ensure visas no longer take a back seat in business travel planning.

“What we find is a lot of companies disregard the need for a managed way to deal with visas,” he says. “You’ll optimise your travel booking, you will work on your hotel programme, you will try to have the best travel policy you can, but visas are an afterthought, until you get stuck at customs because you don’t have the right one.

“As we are thinking about whether or not people are going to need a visa to travel to or from the UK, corporations should start to look at what it means for them,” he adds. “They should make sure they’ve revised internal policies, suggest employees keep an eye on the expiration date of their passport, and start to think how they’ll deal with visas, whether or not Brexit makes it mandatory for UK corporations.”

The question of passports is also raised by GTMC. It makes the point that, under the Schengen Border Code, the UK may be required to comply with the rules applied to “third country passports”, which include a requirement that they have at least three months’ validity remaining on the date of departure.

Travel managers and buyers, therefore, need to keep a closer check than before on expiration dates. A no-deal scenario could also see aviation impacted. Back in late September, technical notes were released by government that said UK- and EU-licensed airlines would lose the automatic right to operate air services between the two without seeking advanced permission.

Though “it would not be in the interests of any EU country or the UK to restrict” these permissions, “there could be some disruptions to flights,” says the GMTC.  That concern is echoed by one senior German travel buyer, too.

“I see the largest impact will be on airlines and the air traffic agreements, namely the Open Skies agreement,” he says. “The UK or EU might decide to not allow an airline to fly into the UK or from the UK to the EU anymore. Therefore, many flights could be grounded in the beginning and this would mean, for travellers, that supply is down for a while, and prices will go crazy for the remaining seats.”

Other areas for travel buyers to consider include mobile roaming. As of 2017, mobile roaming charges across the EU were abolished “following a long campaign and a series of staged price cuts,” says Amex GBT.

Brexit may see those prices rise again and in that scenario, travel managers should “take a close look at their travellers’ mobile statements and seek alternative solutions”, such as international data packages or secure wifi hotspots.

Then there is medical insurance – the European Health Insurance card (EHIC) granting British citizens state-provided medical treatment while travelling could cease. In addition, there may be a change in logistics at arrivals gates in airports.

The EU lane may be removed for those entering the UK, says the GTMC, which could impact travel times. None of this touches on the impact of the longer term, and virtually unknown, changes to our relationship with the EU once new agreements are made. With the divorce deal still not in place, the only clues as to what that future relationship may be are in the vague language of the political declaration agreed to by Mrs May and the EU.

The UK may see a hit to its economy as this future is thrashed out. “It is expected that the UK economy will go down a bit, resulting in the pound losing value. Therefore, any travel outside of the UK will become more expensive,” predicts a senior buyer from Germany. “Plan to have more budget for travel from the UK.”

We may expect to see the dynamics of the workforce change, too. “With new EU citizens and potential hires being treated just the same as new non-EU citizens, employers will have to think twice about sponsoring them to the tune of probably around £5,000,” points out a senior marketing and branding buyer.

Existing EU employees may also find themselves required to qualify for residency under the proposed settlement scheme, he adds. “We have always tracked our EU employees and their family members so we are prepared for action when it happens.”

Ultimately, monitoring the rapidly evolving situation in this way is one of the few practical things travel buyers can do.

“There is still a great deal of uncertainty around the implications of Brexit in terms of trade deals, so until the situation becomes clear, it’s very much business as usual for our clients,” says Paul East, chief operating officer for UK/ Europe & the Americas at Wings Travel Management. “Our focus is on monitoring the situation and being ready to provide concise information to our clients on the potential impact on travel as and when it becomes available.

“When the implications of Brexit are clearer, we will work closely with our clients’ travel managers and buyers to review their travel programmes accordingly.”

Engage with your corporates

“Given the fast-moving Brexit political landscape it’s difficult for any business right now to put in place any practical steps to mitigate any impact,” agrees Julia Lo Bue-Said, chief executive of Advantage Travel Partnership. “However, TMCs right now should be engaging with their corporates to understand the impact they believe they could be facing.” The only thing we can be certain of right now is continuing uncertainty.

“If we’ve learned anything from global politics over the past five years, it’s to expect the unexpected,” says Amex GBT’s Ferguson.

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