The big issues: what will shape the UK travel industry in 2015?Posted: January 8, 2015
From APD to the Rugby World Cup, these are the major developments, products and events to watch over the next 12 months
Air Passenger Duty
The long-running industry campaign against the much-loathed aviation tax has finally started to see some results from its tireless lobbying of government with major changes in the structure of APD coming into place from April 1.
Long-haul destinations, particularly the Caribbean, are benefiting from the abolition of long-haul bands C and D, meaning that all economy passengers travelling more than 2,000 miles will pay the band B rate of £71, instead of the previous charges of £85 (band C) or £97 (band D).
This change will be rapidly followed by the exemption from APD of all under-12s from May 1, which should significantly cut the costs of families flying to long-haul destinations such as Florida.
Airlines and tour operators are refunding passengers who had already booked flights for summer 2015 before the latest APD changes were announced by chancellor George Osborne in December, as well as adjusting their overall pricing for families taking holidays after May 1.
How much impact these changes in APD will have on overall airline ticket prices has yet to be seen. But combined with the dramatic fall in the price of oil in recent months, there should be plenty of downward pressure on UK airfares to all destinations.
The campaign against APD, led by the A Fair Tax on Flying alliance, will continue to lobby for further cuts or the abolition of the tax, which it says remains “a growing barrier to tourism”.
Package Travel Directive
Abta and other industry bodies will be lobbying furiously in Brussels over the next few months as the European Union enters the final stretch of negotiations over a new Package Travel Directive.
There are concerns in the industry that the current proposals for the PTD from the European Council will not “adequately” capture linked online sales.
Abta also fears that the changes will not offer the “transparent consumer protection for holidaymakers, and a fairer regulatory framework for travel businesses” that the directive was originally intended to create across the EU.
The European Council, European Commission and European Parliament will be negotiating over the next few weeks to try to reach a deal on the final content of the directive. They will not be short of advice from the UK travel industry.
The date of the next general election – May 7, 2015 – has been locked in place since the coalition government was formed in 2010. But given the state of recent opinion polls, it’s anybody’s guess which party or parties will end up forming the next government.
The biggest impact for the travel industry will be the new government’s view on airport expansion in the south-east.
Sir Howard Davies’ Airports Commission is due to give its final recommendation on whether to expand Heathrow or Gatwick just weeks after the election in June.
Whatever the complexion of the government, this is one game of political football that is likely to last considerably longer than 90 minutes.
For the record, neither the Conservatives nor Labour has committed to implementing the commission’s recommendation. It will be interesting to see what they and the other parties say in their election manifestos about airport expansion or whether they just duck the issue.
In the meantime, the travel industry will have to deal with uncertainty in the market as a number of customers opt to await the results of the election before booking their breaks.
Major UK tour operators Tui, Thomas Cook and Monarch are all beginning significant new chapters in their long histories in 2015.
Tui Travel and Tui AG have finally merged to create what joint chief executive Peter Long calls “the world’s largest integrated leisure tourism business” with the increased ability to secure “a pipeline of more exclusive holidays for our customers”.
Thomas Cook is now under the management of industry veteran Peter Fankhauser following the departure of his predecessor Harriet Green, while Monarch will be finding its feet under the new ownership of investment firm Greybull Capital with a strategy that focuses entirely on scheduled leisure flights.
Both Tui and Cook have talked up their long-haul prospects from the UK which should also benefit from the changes to APD and the fall in the price of oil. Long says that Tui is “now bigger than British Airways and Virgin into Jamaica” thanks to the success of its Boeing 787 Dreamliner aircraft.
Fankhauser has also been keen to stress that he successfully persuaded the company’s previous management to keep Cook’s long-haul operations, and one of his first moves as chief executive has been torelaunch the upmarket Signature brand.
Mergers and acquisitions
Last year saw a frenetic M&A market with many of travel’s big names changing hands or owners selling stakes of their businesses to new investors.
The biggest potential deal of 2015 could be British Airways owner International Airlines Group’s pursuit of Aer Lingus, with an opening bid being made in December.
IAG chief executive Willie Walsh has already been rebuffed in his initial approach for the Irish airline he once used to run. If he comes back with a successful better offer, it will further strengthen BA’s grip on slots at Heathrow, but what would competition authorities both in the UK and Europe think of such a move?
The CAA’s proposal to get rid of the Small Business Atol (SBA) caused plenty of criticism, particularly from smaller independent operators and some agents. Aito chairman Derek Moore condemned the plans as beinga “sledgehammer to crack a nut”.
The overwhelming majority of responses to the CAA’s consultation on the future of Atol were on the subject of SBAs. Richard Jackson, the CAA’s group director for consumer protection, has admitted that the strong response left them “scratching our heads”.
Jackson has talked about offering a “middle ground” solution to the trade including more stringent financial testing to reduce the failure rate of small operators. Exactly what the CAA comes up with as a “compromise” method of replacing SBAs will become clear when it releases the results of the consultation in the next few weeks.
New cruise ships
This year promises to be another landmark one for the UK cruise industry with the launch of the biggest-ever ship built specifically for the British market – P&O’s £500 million Britannia, which will carry up to 3,650 passengers when it launches from Southampton in March.
Passengers seem to be excited about the ship – P&O set a new personal best for first-day sales when Britannia went on sale last year, outperforming the previous opening-day sales mark set by Ventura in 2007.
Arch-rival Royal Caribbean will also be making waves in the UK market when it launches the even bigger Anthem of the Seas from Southampton in April.
The 4,180-passenger ship is a sister to Quantum of the Seas, whichlaunched in New York in November 2014, and will be sailing on a series of Mediterranean itineraries from Southampton for summer 2015.
What impact these new mega-ships have on the ex-UK cruising market should become more apparent during the crucial “wave” New Year sales period.
Following the distractions caused by last year’s football World Cup in Brazil and the London Olympics in 2012, the industry will breathe a sigh of relief at the lack of a major global sporting event during the coming summer.
The biggest tournament of the year in the UK will be the Rugby World Cup in England, but this six-week event is safely tucked away in the shoulder season of September and October.
Other major sporting events include the Ashes cricket series between England and Australia in July and August, while taking centre stage early this year is the Cricket World Cup in Australia and New Zealand in February and March.
Sourced from TTG Digital