Steve Endacott asks how a hot summer, Brexit looming and crashing oil prices will impact the overseas holiday market
With so many moving variables this year, it is hard to predict sales for summer 2019, but booming January sales seems very unlikely.
The year following a hot summer in the UK, normally sees holidaymakers who don’t need to book precise dates in school holidays, take more of a “wait and see” attitude, as UK staycations become a consideration, compared to the expense of an overseas holiday.
This year a looming Brexit will also play into people’s minds. Like most people, I find it hard to predict what will happen over the coming weeks, but it is easy to see an outcome where parliament rejects May’s Brexit deal, forcing either a people’s vote or worse, a general election.
Both outcomes will push a Brexit outcome closer to the summer, creating uncertainty over airlines’ landing rights and in turn, flight schedules. Nobody in the industry expects an outcome where mutual landing rights and visa free holidays are not maintained with the EU. But can we guarantee customers this given the possibility of a hard Brexit occurring?
The answer is simply ‘no’.
Therefore, scaremongering could easily impact the crucial January booking window, with customers delaying holiday bookings until there is more certainty.
Given the dramatic drop we have seen in aviation fuel prices in the last two months, from $75 a barrel in October to its current low of $50, it’s unlikely airlines will reduce flight capacity, unless they are physically forced to. Although, in the short term, airlines are unlikely to benefit as they will have hedged fuel extensively, (ironically, a lack of hedging could be Norwegian Airways’ saviour). Holding or increasing capacity as these hedges run out in the summer suddenly becomes highly attractive.
The deciding factor is likely to be how sterling reacts to the forthcoming disruption and if it can hold above €1 to £1.
Assuming it does, then you can easily see how the travel industry’s year could be saved by a booming lates market, fuelled by pent-up demand and airlines adding extra capacity, once Brexit certainty is gained.
However, you could just as easily predict a Doomsday scenario, where a tit for tat hard Brexit seriously damages the UK overseas holiday market.
At this stage I remain an optimist, but I’ll be advising the companies I work with to continue to batten down the hatches, until a reliable Brexit ‘crystal ball’ becomes available, as it’s a 50:50 bet at the moment.