20
August
2019
|
15:13
Europe/London

THE LOTUS WEEKLY BREXIT ROUND-UP

Summary

The LOTUS Weekly Brexit Round-Up

Frances Tuke summarises the recent Brexit drama gripping Westminster and its impact on the travel industry in this week’s round-up.

TRAVEL INDUSTRY

TUI reports optimism despite downturn in earnings in 3rd Quarter

TUI reported that its underlying earnings dropped by 46% in the third quarter 2019. It said that this was largely due to the grounding the Boeing 737 Max but it also said that delayed customer bookings driven by the Summer 2018 heatwave, the continued Brexit uncertainty and considerable aviation overcapacity to Spanish destinations had all contributed.

Speaking to Travel Weekly, Chief Executive Fritz Joussen said: “Our underlying business remains robust despite the challenging environment.” He pointed to an upturn to the lates market, with price revenue 1% up year-on-year but bookings down 1% year on year to early August.

Late Summer Market up 15%

Bookings analyst GFK has reported a 15% surge in bookings for the week to 10 August, with prices up 2%. They report that the Summer bookings for the season to date remain 1% up overall, with the season having recovered from where it was.

TAP Air Portugal drops routes to London City

Portuguese flag carrier, TAP Air Portugal will withdraw all its routes from London City citing over capacity and Brexit impacts.

KPMG research: one in ten missing out on hols because of Brexit

Research by accountancy firm KPMG has found that one third of Britons have tightened their belts because of Brexit uncertainty and 9% say they have foregone an overseas holiday with parents with young children the most concerned - with 15% of this group saying that they have sacrificed a holiday this year.

UK inbound members are confident in the face of no-deal Brexit

Travel Weekly reports that the latest UKinbound Business Barometer, a rolling survey, found 75% of member businesses reported bookings, visitor numbers or customer orders in May and June at the same level or higher than last year, while 84%, reported yields the same or higher year on year in the period.

Members reported China and the US remain the leading markets for growth in visitors to Britain, with 43% of respondents reporting growth from one or other of these markets.

At the same time, almost one-third (29%) reported a continuing decline in visitors from France and Germany.

Private equity expected to invest in further travel firms this year

TTG has reported that business advisory firm RSM believes the travel sector remains an attractive prospect for private equity (PE) investors, despite the uncertainty around Brexit. While investment in travel was limited during the first six months of the year, a handful of “notable” deals suggested PE firms were still optimistic about growth opportunities within the UK travel sector.

Political update

  • Operation Yellowhammer leaked
  • MPs of rival parties offered themselves as prime minister
  • 100 more wrote to demand return of parliament
  • Prime Minister heads to Europe

Operation Yellowhammer

This Sunday’s Sunday Times reported on the leak of a collection of Government documents –named Operation Yellowhammer. This cross-government study into the impact of a no-deal Brexit, being used as a basis of planning revealed warnings of food, fuel and medicine shortages and delays at UK borders if the UK leaves the EU without a deal. The Sunday Times robustly defines the assessments in the documents not as ‘Project Fear’ – but ‘the most realistic assessment of what the public face without a deal’.

Border Checks

UK citizens travelling to and from the EU maybe subject to increased immigration checks at border posts. This may lead to passenger delays at St Pancras, Channel Tunnel and Dover – where border controls with the EU work together at present. Depending on what plans EU member states put in place to cope with these increased immigration checks, it is likely delays will occur for UK arrivals and departures at EU airports and ports. This could cause disruption on transport services. Travellers may decide to use alternative routes to complete their journey.Michael Gove, Minister responsible for no-deal preparation, said in response that the documents were old and preparations had accelerated since Boris Johnson became Prime Minister. He added that the documents outline a “worst-case scenario”.

Institute of Directors response

IoD’s Interim Director General Edwin Morgan commented that companies remained “seriously unprepared” for no deal, as reported in the Financial Times. “Until recently the level of planning has been fairly low. Our surveys show that businesses had been waiting to see what happened. The message from the government is getting clearer but is still not clear enough”.

Jeremy Corbyn plans for vote of no-confidence and a caretaker government

Jeremy Corbyn outlined his plans to defeat a no-deal Brexit in a letter to Parliamentarians last Wednesday. The proposals see the Labour leader becoming caretaker Prime Minister.  He said that after winning a no-confidence vote he would form “a strictly time-limited temporary government with the aim of calling a general election, and securing the necessary extension of Article 50 to do so”.

His letter had a mixed response, with a number of Tory rebels saying that they would talk to Jeremy Corbyn. However, leader of the Lib Dems Jo Swinson said she would not support making Mr Corbyn prime minister.

She called him "divisive" and said he would not command MPs' support. Instead, she suggested Tory MP Ken Clarke or Labour's Harriet Harman could lead an emergency government to prevent a no-deal on the 31 October deadline.

She added that MPs should "stand and be counted" and try to pass legislation in Parliament to ensure the UK does not leave without an agreement with the EU.

Calls to recall Parliament

Inews has reported that more than 100 MPs from are calling on Boris Johnson to recall parliament at a time of “national emergency”.

The letter, sent to the Prime Minister and signed by Conservatives Guto Bebb and Dominic Grieve, among others, demands more time to scrutinise the new government ahead of an increasingly likely no-deal Brexit at the end of October.

Boris Johnson’s trip to see Angela Merkel and Macron

The UK will leave the EU on 31 October with or without a deal, he will insist.

The Prime minister will travel to Berlin to meet German Chancellor Angela Merkel on Wednesday, before going to Paris to meet French President Emmanuel Macron on Thursday.

According to the BBC, Mr Johnson is expected to say Parliament cannot and will not change the outcome of the 2016 referendum and insist there must be a new deal to replace Mrs May's withdrawal agreement - defeated three times by MPs - if the UK is to leave the EU with a deal.

However, it is thought their discussions will chiefly focus on issues such as foreign policy, security, trade and the environment, ahead of the G7 summit next weekend.

The BBC says that Boris Johnson had been reluctant to fly to meet European leaders until it seemed a breakthrough was likely. But - it still doesn't

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If you have any queries or comments contact Frances Tuke; frances@wearelotus.co.uk