It has not been a particularly good news week for any mainstream form of transport. As travel is intrinsically linked to the fortunes of the leisure and tourism industries this is more bad news for tourism in general and destinations (by definition the end point of a journey), in particular. It is especial worrying as it is occurring as we head into a potentially make or break, post covid, main summer season for many businesses, operators and for some destination management and marketing organisations.
If any policy makers ever doubted the critical relationship between the cost, ease and reliability of transport and travel to “tourism” they need look no further than the impact of travel bans, travel restrictions and/or public retinene to make journeys or use certain types of transport both during and subsequently after the recent pandemic. Travel, or the inability to do it, acts like switch or, more accurately, as a regulating valve that can adjust flows from anywhere between full on to closed off.
1. Road. Fuel price rises and current costs are today’s headline issue, including: news that some forecourt prices have gone above the £2 mark per litre for the first time (perhaps a good reason to consider flogging petrol by the pint but perhaps not by the gallon as this now would be approach £8!), and that at the national “average price” in the order £1.83 per litre, the cost of filling the tank of the “average car” is now over £100. These headlines in their own right will fuel a greater retinene to travel by private car in the dominant domestic market and, in particular, to travel further than absolutely necessary, particularly for discretionary purposes. There is little we ourselves can do about this PR disaster. From past much smaller fuel hike experience we do need to recognise there will be winners and losers, driven largely by perceived and real proximity of the destination product to larger conurbations and centres of population. There will also be socio-economic influences relating to discretionary, disposable income, as opposed necessarily to the totality of family income. What is important is the level of committed expenditure and by default that remaining for a myriad of discretionary activities. Again, experience suggest key markets like working families may be disproportionately affected by fuel price rises, as a part of a more general cost-of-living crisis?
Fuel costs are also a critical issue for day trip and staying group travel. We already believe that approaching 50% of the pre 2019 coach fleet (for all purposes) was taken off the road by coach operator failures, closures and restructuring. We also know that while coach travel has started to recover it has been a slow and painful process. Fuel price rises in the order that we are currently seeing will have a significant impact on coach borne travel and, in particular, for those operators who have and normal do organised and priced activities well in advance. For reference the average price of diesel in the UK a year ago was c 50p a litre lower than it is today and critically still c 40p lower in December 2021. Part of the problem isn’t simple scale but a combination of both the timing and pace of the increases.
For planning purpose, we all need to recognise that external influences could very easily see fuel prices being maintained at their current levels for sometime to come, or even to rise further. Even with radical Government fiscal intervention it is almost inconceivable that the price will drop rapidly, back towards the 2021 and pre 2019 sub £1.40 price levels. So, any hoped-for intervention will at best alleviate but not remove the fuel cost problems in their entirety. And yes, electric and hybrid car ownership has increased significantly and is therefore a new and largely unknown factor to add to the mix. However, at around 6% of new cars purchased annually and c 1% of the total on the roads, electric and hybrid vehicles ownership isn’t yet significant enough to make a marked difference (and will not be for some time to come). Even if electric vehicles were a major positive that would be of only limited help as the supporting infrastructure in and between most urban and rural destinations have yet to be addressed in any meaningful way.
2. Rail. This week’s news of the first of a potential series of national rail strikes later in June is bad news for both commuters and for business and leisure travel. The rail unions demand for higher wages and guarantees of fewer redundancies in what is likely to be a complex and very difficult post covid restructuring of the UK rail network is beyond our control. We can only hope that the threat of a strike, or the actuality of what is going to the biggest, widest industrial action in the railway’s history (21, 23, 25 June but effectively 21 to 26 June) will bring about a mutually agreeable resolution and avoid further action now or into and beyond the main summer season. If it goes ahead the June disruptions will of course be damaging to leisure and tourism in general and devastating to certain activities, for example, pre-planned and immovable major events that rely on public transport.
The threatened strike action, if nothing else, confirms our understanding that Great British Railways (GBR) who are working up their 5, 10, 30-year strategy for presentation to Government to be presented soon are between a rock and a hard place. Core income generated by commuter travel revenue collapsed during 2020 -21 pandemic and, due to radically changed and changing working pattern, shows no sign of returning to anywhere near historically high levels of 2019. HMG has burnt through eye watering sums of additional subsidy to keep the railway network operating and avoiding collapse from the beginning of 2020 to date. That additional funding is by necessity being withdrawn and GBR are now tasked with cutting their cloth to match both reduced pre covid, core Government subsidy and the realities of vastly reduced ticket income. Something major has to give and that is likely to include train services.
Again, there is not a lot we can do to influence GBR’s immediate negotiations. We can of course ensure HMG are aware how painful further stoppages in to and during the summer would be for tourism. Beyond that the threat of strike action is a timely reminder that all is not well within the UK rail industry and that we have a very short window of opportunity to ensure that the restructuring to come does not further disadvantage current, mainly off peak, leisure travel or stop new leisure travel opportunities being developed, at any time of the day or week. To this end it is important to understand that as a consequence of the closed-circuit nature of the railway system, any reductions in once profitable twice a day, 5 day a week commuter services will have potentially unintended consequences for currently off-peak travel, due among other thing to both timetabling and physical capacity issues. Rented rolling stock and skilled staff will almost certainly be let go and once let go, it can take many years; potentially up to a decade plus, to take on and train skilled staff and, particularly, to gain access to additional train units, if and when, as seems likely, climate crisis pressure, especially on car ownership and usage, begin to bite and rail demand grows once more.
3. Aviation. The unedifying arguments between HMG, airports and airlines about who is or isn’t responsible for UK air travel chaos reached new peak over the recent half term holiday, as we saw the unintended consequences of a rapid return to a reported 80% (?) of 2019 booking levels. Not all operators and airports are as badly impacted and not necessarily all of the time. Nonetheless, we are now told that problems will in all likelihood persist into the main school summer holiday period which is bound to effect large proportion of any international inbound and those domestic outbound travellers already booked to travel. It is also likely to have potentially serious, negative PR impact on those yet to commit to holiday and travel plans. We are already aware that the UK airline industry has some way to go before it fully recovers, despite the apparent 80% claim. The PR disaster, coming on top of increased fuel prices makes full recovery at best a more distant prospect.
Higher prices and the potential for longer term reduction in total capacity remain very much on the cards. Whether a rapid return in the domestic international outbound to 2019 levels and potentially continued year on year growth thereafter is, or is not in the domestic tourism industry’s best interests is a complex question best avoid for the time being. What is clearer is that any negative impacts on inbound international tourism are unwelcome, even if the bulk of those visitors, then continue to gravitate mainly to London and a relatively small number of core UK cities and historic towns. The sudden loss of international visitors at scale, inevitable means, genuine, unwelcome, short-term competition for loyal domestic custom between establish, mainly domestic facing destinations and the popular mixed domestic and international venues of which London is by some margin the largest.
The very public argument between HMG, airports and operators unfortunately coincided with the recent publication of the Government’s 10-point plan, “Flightpath to the Future” which sets out priorities and ambitions for the UK aviation and supporting industries for the next 10 years. The report has some very worthy objectives, although a little light on how these objectives will actually be achieved, with what; all of which doubtless will follow or become clearer in due course. In light of recent events, I was struck by the following key paragraph and the urgent need expedite its noble sentiment:
“Central to successfully delivering the ten point plan, and meeting our ambitions for the future of the sector, is recognising that it must be delivered in partnership. Whilst the pandemic has presented huge challenges for the sector, there are many positive lessons to be learned about the value of close collaboration between Government, industry, regulators, and other key partners. On that basis, alongside launching this strategic framework and ten point delivery plan, we will also be launching a new Aviation Council.”
The full report can be accessed via the DfT publications page. The few introductory sentences found there are worth reading for context. The summary of the ten point plan can then be found on page 9 to 11 of the full report, the gist of which, if your pressed for time, can be gleaned simply by reading the bold highlighted sentence in each of the ten sections. For those wishing, or needing to understand a little more, for example if you have a regional airport interest, the executive summary pages 4 to 8 pretty much does what an executive summary should do. The full 70 odd pages of text in the report will be of more interest for those in the aviation industry, or I suggest can safely be put aside by destination mangers for your summer holiday reading: https://www.gov.uk/government/publications/flightpath-to-the-future-a-strategic-framework-for-the-aviation-sector