What might Brexit mean for business travel and TMCs?

Abta chief executive Mark Tanzer gives BBT an insight into what the travel industry could look like if the UK votes to leave the EU in June.

In 2014, 68 per cent of business visits from the UK were to EU countries – this is almost 4.6 million trips. For business travel companies, a vote to leave the EU Referendum could have a significant impact.

ABTA recently worked with Deloitte on a report which considers what the impact of a Brexit would mean for the travel industry – below are some key considerations for TMCs and corporate travel buyers.

Economic considerations

Fundamentally, for a strong business travel market there has to be a strong business market. Around half of all UK exports are to EU countries, which makes the EU the single most important market for the UK.

In the event of a Brexit, there may be a depreciation of the pound against the Euro. As the UK is a net importer, this would impact on the prices of imported goods, and a prolonged and notable weakening could have an inflationary impact on the UK economy.

For TMCs, the economic uncertainty may have a negative impact on their clients’ businesses, and it means that a corporate travel buyer’s budget will not stretch as far when buying abroad.

Access to the rest of Europe

A UK vote to leave the EU may lead to uncertainty around many of the agreements and regulations that currently allow for the smooth running of transport systems across the EU. For example, the Single European Sky is a set of four regulations designed to ensure the smooth operation of flights, increase efficiency and reduce delays within European airspace. Although we may be able to negotiate an access deal, we would lose our place at the negotiating table in shaping future regulation.

EU regulations opened up the flight market, meaning cheaper flights and more destinations – this has been particularly helpful for business travellers as new markets emerged. Aviation regulations include Article 119,which guarantees EU airlines the right to operate point to point air routes within the EU, and the Open Skies agreements which allow EU countries to act ‘as one’ when agreeing rules with other countries.

In the event of Brexit, these arrangements would have to be renegotiated or replaced, meaning uncertainty for travellers and possibly higher costs. The extent to which operating from outside the EU would increase costs for business travellers would depend largely on the agreements the Government adopts, and the ease at which the transition to the new arrangements takes place.

Freedom of movement

The ability to travel and work freely throughout the EU’s Member States has provided lots of opportunities for business, removing the hassle of visas. For the business world, this has made travelling for work even easier.

Being able to get your best talent across Europe, whether for longer work placements or for business trips, is a significant benefit of the EU’s freedom of movement for business. The uncertainty created by a Brexit may increase the cost of travel and increase the burden of administration, for both TMCs, corporate travel buyers and the travellers. 

Day to day implications

When travelling abroad, there are several day to day impacts of EU legislation and regulation that make the business traveller’s life simpler. The digital world is now an unavoidable part of business life and business travellers expect to be able to quickly access the internet wherever they are, no matter what device they are using. While accessing the internet on mobile device used to be prohibitively expensive, recent caps introduced by the EU have harmonised the maximum charges that travellers face, with roaming charges due to be abolished completely in June 2017. In the event of Brexit, the law applying these rules would be removed and the UK Government would have to act to make sure it remains on our Statute books.

At ABTA, we recognise that people will approach the referendum from a wide range of considerations, including personal, professional and economic. The conclusion that we’ve drawn from looking at the evidence is that, from a travel perspective, the upsides of staying in Europe outweigh the downsides of leaving.

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