News

Brexit could hit UK airlines and travellers hard

27 Jun 2016 by Clement Huang

International Airlines Group (IAG), the owner of British Airways, Aer Lingus, Iberia and Vueling, has told investors that they should expect lower earnings this year, following last week’s referendum results which saw the UK vote to leave the EU.

According to The Telegraph, the aviation giant stated that consumer nervousness has already led to a decline in flight demand in June and they are now expecting lower than forecast profits for 2016.

In a statement, IAG said: “[The company] believes that the vote to leave the European Union will not have a long-term material impact on its business. In the short term, however, in the run-up to the UK referendum during June, IAG experienced a weaker than expected trading environment.”

Questions also surround IAG’s ownership of European carriers Iberia (100 per cent) and Aer Lingus (98 per cent), as the EU currently has a rule that caps non-EU ownership of EU airlines at 49 per cent.

London Heathrow Terminal 5 – the home of British Airways and Iberia

Travellers are unlikely to feel any effects from “Brexit” in the short term, but long-term ramifications could be more significant. Potential issues that will need addressing range from freedom of movement to EU air passenger rights that offer protection from flight complications. Other effects could include the cross-border policy currently in place, which allows EU passport holders to use dedicated E-passport lines while passing through immigration. Changes to the policy could result in longer queues for these travellers.

These points, and others, have been raised in our forum: businesstraveller.asia/discussion

Alsacienne asked: “What will happen to our maroon passports and the electronic chip? Will the UK remain in or join the EEA so we can ‘fast track’ through Border Control?”

Alex_Fly said: “BA , Virgin and Easyjet will be happy. Once the UK leaves, Regulation 261 won’t apply anymore to most of their flights. That said, if the GPB stays low against the USD/Euro, their costs will skyrocket plus demand may weaken from Brits who can’t afford to travel to Malaga anymore…”

Lugano Pirate pointed out: “The announcements from Easyjet and IAG were interesting in that they were saying before the vote it would be a disaster for them, and now they are saying it won’t make a big difference?”

View full thread here

For more information, visit iairgroup.com

Clement Huang 

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