BTN's annual answer book for business travel managers.
Renaissance Atlanta Waverly - May 12, 2019
New York City - May 17, 2019
Seattle Marriott Waterfront Hotel - May 21, 2019
With only two months until the U.K. exits the European Union on March 29 and no one on this planet knowing
what form that departure will take, travel management professionals are sitting
frustratedly in limbo. “I’ve never seen an issue with so much uncertainty about
what the outcome could be,” said Jo Hillman, senior director of sales for the U.K. and Ireland at Carlson Wagonlit Travel.
The U.K. Parliament remains deadlocked over
options ranging from postponement—and potential abandonment—of Brexit to
crashing out with no divorce agreement, an outcome that would affect business
travel, and indeed everything to do with business, much more drastically. “I don’t know of anyone who has been able
to make contingency plans because we are subject to too many ‘what ifs,’” said
Tom Stone, partner at consultancy Nina & Pinta. There is no point, for
example, in urging employees to avoid travel in the days following Brexit,
Stone believes, because “if disruption does occur, and I’m not convinced it
will, they won’t fix it in a week.”
Yet, while there is little evidence of
travel managers preparing comprehensive strategies, some are taking piecemeal
precautions. “We are not actively encouraging or booking London Heathrow as a
stopover airport for indirect flights,” said Ruediger Bruss, travel and
mobility category manager for German tire manufacturer Continental.
However, that is the only decision
Continental has taken so far regarding travel. “We are making plans for
production, logistics and supply chain, but we will deal with anything around
travel when it comes up, just as we would a strike or weather situation,” said
Bruss. “It’s not central to our business and completely unknown.”
Some U.K.-based travel managers also are making
preparations, according to Sandy Moring, director of education for the U.K. and
Ireland’s Institute of Travel Management. In particular, they are rethinking
that end of the spectrum where business travel merges into mobility and HR: issues like long-term assignments and relocation. “Companies are
looking at whether to place their people into the EU and whether they need to
rotate them because they may not be able to settle there,” said Moring. “One
travel manager told me she had not used serviced apartment providers before but
suddenly they are becoming her best friends.”
Moring also flagged concerns among travel
managers whose companies send personnel to emerging economies and are reporting
shortages in the U.K. of health essentials like prophylactics for malaria.
“These travel managers say there are already some problems in getting medical
supplies, and their view is it’s only going to get worse,” Moring said.
Then there is the question of how to advise
travelers. Moring said travel managers are urging building more time into trip
agendas because of potential extra delays at borders. Clive Wratten, CEO of
travel management company Amber Road, said his company is briefing clients about issues like International Driving Permits and passport validity (see Consequences of a No-Deal Brexit below).
TMCs also are having to make their own
contingency plans. “We have imposed a staff leave embargo one week either side
of 29 March. We feel a bit naked because it is so close and we still don’t know
what is going to happen,” Wratten said. Hillman said CWT senior leaders have
held numerous planning calls because “if planes are grounded, it will be our job
to support clients with their travel plans. It’s very unlikely, but we have to
make sure we are ready.”
What is much more likely is disruption to
the lives of EU-national employees living in the U.K. and vice versa, a common
phenomenon in an inherently cosmopolitan sector like business travel. “Our
services are increasingly digital, so for us, it’s more a case of what do we do
for people working for us from the EU. We have been taking steps to make sure
they are OK,” said Hillman.
Analysis of bookings by CWT suggests Brexit
is already affecting business travel. Bookings to and from London City Airport,
which largely handles business passengers flying to and from the EU, have
fallen markedly since the U.K.’s Brexit referendum in June 2016. At the same
time, bookings to Dublin have risen substantially. Financial services companies,
in particular, have been relocating jobs to the Irish capital since the
referendum, although Dublin has also been thriving as a high-tech hub.
FCM Travel Solutions sees a distinctly
mixed picture. “Some clients are cutting spend on internal travel, but it is
hard to know if that is Brexit related,” said U.K. general manager Jo Greenfield.
“FCM saw 17 of our top 20 U.K. clients up-trade by anything from 5 to 400 percent
in 2018. We foresee an increase in travel to and within Europe as companies
look to outsource business functions and set up shared services in markets like
Consequences of a No-Deal Brexit
Flights: Crucially, the European Commission said in
December it would allow flights into and over the EU from the U.K. until March
30, 2020, providing the U.K. reciprocates. But two big concerns need watching.
The first is that the European Commission has given guidance that flight volume
in 2019 must be capped at 2018 levels. The International Air Transport Association
estimates up to 5 million extra seats are scheduled for 2019 and will be "at
risk" should no deal happen. "There is legal and commercial uncertainty over
how the commission's plan to cap flight numbers will work," said IATA director
general and CEO Alexandre de Juniac. The second problem is that the European
Commission will make no exceptions to its rule that only airlines
majority-owned by European Economic Area—the EU plus Iceland, Liechtenstein and
Norway—or Swiss nationals may operate flights within the EU. This is a complex
issue involving not only equity but also voting rights and affects EasyJet and
Ryanair plus International Airlines Group carriers Aer Lingus, Iberia and
Vueling. All have stated they are confident they can comply by March 29, but
there is no certainty yet about any of them.
Cost: Banks expect the pound to fall in the event of a no-deal, having
already plummeted to and remained at its lowest levels against the U.S. dollar
in 25 years, following the 2016 referendum. If the pound falls again, hotel,
restaurant and other costs would rise even higher for overseas trips by U.K. travelers. Conversely, prices would theoretically fall further for visitors to
the U.K., but there may be inflationary pressures, too. Speaking on condition of
anonymity, one travel manager working in the U.K. public sector warned: “Nearly half of hotel staff in the U.K. are non-U.K. nationals, working for wages the British wouldn’t accept. The hotel industry
will have to up its wages and pass the cost on, so we run the risk of rates
going through the roof.” One other issue to consider is GDP growth or
contraction. Barclays has said demand uncertainty caused by a no-deal could
push down airfares.
Border Controls: The U.K. government is warning citizens that U.K. passports
with less than six months left before expiry may not be accepted by EU
countries. Meanwhile, European tourism association ETOA has cautioned travelers
to expect longer queues at both ends, with the EU, for example, taking an
average of 90 seconds longer to process passport holders from outside the
union. Both the EU and U.K. have assured visa-free travel if the
other side reciprocates. However, from 2021, U.K. passport holders will have to
apply to travel visa-free through the online European Travel Information and
Authorisation System, similar to the U.S.’s Electronic System for Travel
Insurance: All EU citizens are eligible for European Health
Insurance Cards, giving them the right to state-provided healthcare while
visiting any EU country. Under a no-deal, EHIC cards for travelers based in the
EU would no longer be recognized in the U.K. Meanwhile, U.K. citizens’ EHIC cards
would be invalidated everywhere. Travel managers may wish to check their
Driving: The U.K.’s Foreign and Commonwealth Office has
advised passport holders they may need to carry an International Driving Permit
in addition to their driving license when visiting some EU countries.
On April 9, the U.S. Department of State added a kidnapping/hostage-taking risk indicator to its...
In December, United will add three weekly nonstop flights to Cape Town, South Africa, from Newark,...
Qatar Airways has issued a response to allegations that its Air Italy investment violates agreements...