Foreword A challenging environment but not without opp
C
onsumer confidence in the UK continues to improve despite the absence of real wage growth.
Incomes are growing but at a rate below
inflation, and consumer spending is being supported by falling inflation, lower fuel prices, a strong pound and, worryingly, an increase in personal debt levels. While the outlook remains positive for
the UK consumer economy, it is not without risk, particularly if there is an interest rate rise in the next nine months. Given this backdrop, significant growth in consumer demand should not be relied upon over the next year. Inbound European travel to the UK, while
still an important source market, is unlikely to fuel notable growth in the sector as there are uncertainties about unemployment and the general health of a number of European economies. A strong sterling exchange rate against the euro would also present a challenge for UK-bound visitors from Europe. Hence, growth will have to come from
farther afield. The UK needs to focus on exports of products and, increasingly, services. The travel sector has great potential and a real opportunity to support this. In the corporate travel sector, targeting
businesses with a strong message on the importance of exports to emerging markets is likely to help stimulate business travel. In the leisure travel sector, the focus should be on targeting emerging market travellers for inbound travel to the UK.
Airport capacity Airport capacity constraints in the UK remain an issue for both the travel sector and the economy as a whole. There is a significant risk that the emerging transport “mega-hubs” in the Middle East and Turkey will continue to gather pace at the expense of the UK’s hubs.
4 | Travel Weekly Insight Annual Report 2014
Growing consumer confidence augurs well for 2015, but travel looks set to remain a sector not for the faint-hearted, says Graham Pickett of Deloitte
The UK will need to act swiftly
and implement urgently some of the recommendations from the Airports Commission report when it is published in 2015. Even then it will probably be too late, with the most realistic and best outcome likely to be the agreement of a larger hub arrangement for North and South Atlantic traffic. The battle for traffic towards the south and east has probably already been lost.
The issue of consumer protection has
been thrust into the limelight across a number of consumer sectors from retail to travel in the past 12 months. Many travel companies continue to struggle with some of the regulatory requirements, particularly following the ruling in the
Jet2.com case on aircraft delays and the continued lack of clarity around the European Package Travel Directive rules. The implications for airlines and
travel businesses following the eventual issuance of new guidance on these areas of legislation will likely lead to an increase in the number of claims as well as some changes being necessary to the way businesses sell leisure packages,
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