Trains, Planes and Automobiles

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The direction of travel for a summer of potential transport problems has firmed up over the last week and it now entirely possible to predict the likely headline impacts for the coming critical school summer holiday period and the important shoulder months beyond that.  There is also good reason to start looking forward to predict where some of the main means of domestic and international travel might be heading in 2023 and beyond. 

1. Trains.  The largest rail strike in 30 years is now going ahead this week, which is hardly surprising given the apparent impasse between Government, the train operators, Network Rail, the rail unions and a large (?) proportion of railway workers. In light of collapsed ticket revenue Government seems set on a significant reduction in total costs (subsidy) to be achieved by potentially radical changes to working practices and potential sweeping “modernisation”. The unions are seeking, among other things, a 10% pay rises and a commitment to no compulsorily redundances during this process. The two basic positions seem diametrically opposed.  Meanwhile, Government, in England at least, take the view that the negotiations should take place between the rail companies and the workforces. This is despite the ongoing strategic review that Great British Railways are undertaking on Government’s behalf. That review is undoubtedly central to every aspect of the future cost reductions, changes to working practices and modernisation.  The Government want (need) to radically reform the railway network’s operation; this looks and feels to me like their equivalent of a coal or steel industry moment.

The rail unions have already indicated an intent to continue to strike during “the summer” should their demands not be met.  The current tone from the Secretary of State for Transport and the General Secretary of RMT, together with comments from rail companies suggests that we are long way from a negotiated settlement.  Therefore, it would be prudent to assume that there could be further strikes, during the coming summer season; areas effected, nature, dates and length as yet unknown. 

The only certainties are that the rail unions need to give a minimum of 14 days’ notice to employees and that the potential inclusion of Network Rail maintenance and signalling staff can and will result in closures even when the train operators and staff are not involved in the strike action. The Westminster Government is now proposing to bring in emergency legislation to allow the employment of agency staff.  Although that legislation, if quickly enacted, would mitigate threatened strike action in a number of other professions, there is still some serious doubts as how it would impact on “safety critical” roles in the rail industry.

The significant impact of this week’s strike on the hospitality industry has been highlighted publicly and flag to Government.  I was alarmed to note that comments made to date highlighted that this will be a particular problem for cities.  From past experience there is a danger that the truism about cities, usually very well served by rail, could (will?) be misconstrued, as meaning that other place will either be largely unaffected or even benefit (as in: foot and mouth was a positive for everywhere outside rural areas, when it was anything but!).  A very clear message needs to be sent out that any destination, urban or rural, on or served by the rail network will be significantly impacted by the current and any future rail strike.  This is not simply a core or other city issue.

2. Air travel.  After a very difficult half term holiday, plagued with delays, short notice cancellations and lost luggage, Government has directed and the airports, carriers and operators have also decided to reduce capacity during the main school summer holiday period, cancelling a significant number of flights.  The numbers of passengers involved could be in the lower single millions (?), the full impact is yet to be quantified. Although deeply unsettling and inconvenient, the advanced warning should in theory mean that many of those already booked (well in advance) will simply be rescheduled and still travel, albeit not necessarily at the time, from the place or with the carrier they originally intended.  

A combination of alarmingly poor PR and the reality of reduced total capacity will ensure that the estimated 80% (?) on 2019 levels of bookings will not, as feared by some in the domestic industry, rise further to match or exceed 2019 levels this summer.  Given other pressures on the domestic industry this might be viewed as good news. However, the bottom line remains that regardless of the current difficulties vastly more Brits will still be taking a main summer holiday or staying trip abroad in 2022 than did in 2021.  That has significant implications for the domestic market, particular a market that previously enjoyed last year’s staycation hike and is concurrently facing a raft of cost-of-living, supply price inflation and staffing cost related issues of its own.

Looking forward, do we jointly believe that: this year’s chaos will deter a full return to 2019 or higher levels of domestic overseas travel demand in 2023?  That the airports and airlines will not have largely overcome the capacity problems they are facing now in the full year to come? Or that the continued financial problems faced by carriers this year will ultimately result in lower, overall capacity in 2023?  Gut instinct suggest that both supply and demand side issues will have rectified themselves by the start of the 2023 main summer season and that in all likelihood we can look forward to a return to at least 2019, if not somewhat higher levels of outbound domestic travel for 2023.

3. Road transport.  The steadily rise in fuel the costs, lest we forget predating the war in Ukraine, is unlikely to rapidly revert to 2021 or earlier levels. The additional pressure on the cost for oil on the international markets, exacerbated by the Ukrainian conflict and the embargo on Russian crude and processed fuels could conceivably get worse still. Whatever happens, record breaking fuel costs are here for the coming summer season and we should recognise and plan on managing the known impacts accordingly. It may seem a little early to call but it is highly likely that fuel prices will remain at or near these historically high levels possibly for a number of years to come. At least until either an international recession dramatically reduces demand, a bad idea all round, or until production and distribution from existing non-Russian suppliers and new fields are significantly increased. This feels very much like a medium-term prospect, not something that is going to be fixed in the next 12, 24 or possible 36 months?

In general, the known impacts are fewer and shorter journey for private cars, price pressures on group travel (coaches) and higher usage and hard to recover cost pressure on public services (bus). Historically fewer and shorter car journeys have benefited attractions and destinations nearer to major conurbations and, on the whole, disadvantaged those further away.  That is of course needs to be heavily nuanced by purpose of the journey. Individuals may prioritise a longer duration, longer distance staying trips, over a number of shorter duration, shorter distance day trips?  Nonetheless, fewer trips and shorter distances remains a good rule of thumb, equating, however you choose to look at it, to fewer visitor for whatever purpose and, by default, lower overall spend nationally.  Local impacts will be driven entirely by local circumstance, proximity and markets which local destination managers are best placed to analyse, understand and act upon.

The fuel crisis should if nothing else focus minds on stimulating the take up of electric vehicles (EV).  The percentage of new EVs to traditional fossil fuelled vehicles sold annually in the UK has increased dramatically, yet the total percentage in use in the UK remains a very low single figure. The recent unexpectedly decision to remove the £1.5k government subsidy on EVs costing less than £32k is unlikely to help.  Meanwhile, meaningful progress on infrastructure development to support popular EV ownership remains poor to non-existent in most routine normal day to day situations. The challenge of addressing charging requirement in a popular urban tourist destination where car usage can range from a few tens on a wet, out of season Wednesday to many thousands on high days and holidays is as yet to be properly considered, let alone grasped at a national or, in many cases, even a local level.  How the introduction of EVs impacts on major rural events or indeed on aspects of rural tourism in general, similarly need to be addressed now, before the potential problems become a reality. 

The current and ongoing fossil fuel crisis doesn’t make the requirement to do something on EV more or less important, just, I would suggest, rather more urgent. There is even a slim chance that those who do grasp the challenges sooner, may just be in a position to reap some unexpectedly early benefits? The longer fossil fuel remains painfully expensive the more likely it is that there will be exponential growth in the total levels of EV ownership.

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