Special Report: ‘Be prepared for anything’, corporate travel leaders warned

Special Report: ‘Be prepared for anything’, corporate travel leaders warned

Political risks could shape the year ahead in the wake of Trump election and as Brexit looms. Ian Taylor reports from the Business Travel Show

Corporate travel leaders have been warned businesses “need to be prepared for anything” in the wake of the Trump election and Brexit vote.

Rohitesh Dhawan, director of the global Brexit centre of excellence at business services firm KPMG, said:

“Political risk is no longer just a developing economy issue, it’s a developed economy issue and ‘what if all bets are off?’ should be part of your scenario planning.”

Referring to forthcoming Brexit negotiations between the UK and EU, he warned: “I disagree that pragmatism will prevail. What makes economic sense will give way to what makes political sense. Businesses need to be prepared for anything.”

However, Dhawan suggested the impact of Brexit so far had been exaggerated and US policies under President Trump could have more impact on travel management companies (TMCs) than Britain leaving the EU.

Speaking at the Business Travel Show in London last week, he said: “The media hype about the number of financial jobs the UK is losing is probably overplayed.

“Zurich probably will pick up more foreign exchange work. Frankfurt probably will pick up more work.

“But I can’t see London losing its position [as a financial centre] given its transatlantic relationship. New York is actually the better option for relocating.

“Banks are moving roles to other locations, but not at the rate sometimes reported. In some cases they have just stopped hiring in the UK.

“More generally, the state of the UK and EU economies will determine demand for corporate travel.

“Mergers and acquisitions (M&A) have a big impact. In the last few months we’ve seen an uptick in M&A and that is forecast to continue, so there will be an uptick in corporate travel.

“The macro economic outlook is less positive. Corporate air travel demand will probably be down 2%-3% by 2020.”

Asked what issues would most affect TMCs, Dhawan said: “One is the volatility of the pound. Companies have to plan for that now.

“The other is non-Brexit related – the new US administration. There has been a significant drop in arrivals to the US. That might overshadow any effect Brexit might have.”

On Brexit, he said: “Disruption to the movement of labour will affect corporate travel. It might be the [UK’s existing] points-based system for non-EU nationals is extended to EU nationals.

“Mutual recognition of UK and EU nationals [already here or in the EU] might be an easy win. My sense is we’ll then probably move to a points-based system that will be more relaxed for skilled workers.”

Dhawan forecast a new layer of checks on travellers to and from the EU, suggesting: “There will be less freedom of movement than now – there will be at least another layer of checks.”

Airlines could not simply expect to access the EU common aviation area, he added, given the EU requirement to accept free movement of labour.

He said: “We might negotiate bilateral agreements, creating a spider’s web [of agreements] between the UK and EU states. But most likely, airlines might access operating licences in the EU.”

Dhawan said open skies “is likely to be covered” in any a transitional agreement, but said: “It’s too hard to say what a transitional agreement would look like. We just don’t know.”

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