The UK is set to implement a new Electronic Travel Authorisation (ETA) system that will mandate visitors to pay a £10 fee.
The scheme, akin to the United States’ existing ESTA program for non-visa travellers, is scheduled for a phased rollout starting later this year.
The ETA is slated to begin in October for travelers from Qatar, before broadening to include all Gulf Cooperation Council states and Jordan by February 2024. The subsequent global expansion throughout 2024 will encompass travellers from the United States and European Union countries, with the exception of Ireland.
Prospective visitors will apply for the ETA online or via a mobile application. Once approved, the authorization allows multiple entries into the UK over a two-year period. Applicants are required to provide personal and biometric information, such as a digital photograph, and respond to suitability-related queries.
To provide a comparison, the U.S. ESTA application currently costs $21 and is valid for two years. The European Union also has a similar system in the pipeline— the ETIAS— with a €7 fee and a three-year validity, although its launch has been postponed to 2024.
Government and Industry Reactions
The UK government maintains that the ETA scheme forms part of its efforts to digitize the nation’s border control, thereby enhancing both security and customer experience. Immigration minister Robert Jenrick expressed that the ETA would make travel to the UK easier and more affordable for visitors from the Gulf states and Jordan, who significantly contribute to the UK’s tourism industry. He added that despite being an additional cost, the ETA fee would help strengthen the security of the UK border, thus ensuring the safety of their communities.
However, not all feedback has been positive. Joss Croft, the CEO of UKinbound, voiced concerns about the potential impact of the ETA fee on the UK’s international price competitiveness, as it is already affected by high taxes and costs such as VAT on hospitality, high Air Passenger Duty, and the discontinuation of tax-free shopping.
The new ETA scheme comes at a time when the corporate travel marketplace is facing considerable challenges. The economic and political state of the UK, coupled with high travel costs, have led to what some industry insiders have described as a “hot mess”.
This phrase, which essentially means “a person or thing that is spectacularly unsuccessful or disordered,” could be a fitting descriptor for the turbulence in the UK’s political and economic arenas. It also underscores the gravity of the challenges faced by the travel industry amid the ongoing pandemic.
Economic Turmoil and Its Implications for Business Travel
The volatile economic landscape in the UK— characterized by inflation, market instability, and political upheaval— has potential implications for business travel. The prospect of a change in the ruling party, which opinion polls suggest is highly probable for the first time since 2010, could add to the uncertainty for travel buyers.
Travel costs have been “going through the roof,” according to industry insiders, even before the political turbulence that saw Liz Truss’ premiership end after only 45 days. This trend was noticeable well before Truss assumed office in September, and it’s a problem not unique to the UK.
Estimates of the rate at which travel prices are rising vary, but they all point to double-digit increases. Some even suggest that the average ticket price paid by corporate travellers is now 42% higher than pre-Covid levels.
One of the significant factors contributing to the rising cost of business travel for UK-based travelers is the weakness of Sterling against the US dollar. This has been an issue since June 2016, when the UK voted in favor of Brexit. The decision caused the pound to plummet from $1.50 to $1.33 overnight, and it has yet to recover.
A combination of factors, including post-lockdown demand surge, increasing input costs for labor and fuel, and capacity constraints driven by a labor shortage, have worsened the situation. The situation for long-haul carriers is particularly grim as around 60% of their costs are in dollars.
Despite these challenges, there’s no discernible impact on bookings at present. However, if the situation persists, it could potentially discourage US companies from making acquisitions in the UK’s travel sector.
High Borrowing Costs and Fiscal Deficits
The high interest rate the UK government pays for its borrowing, along with a growing hole in the public finances, could potentially dampen demand for business travel. The economic challenges could affect travel by or on behalf of the public sector, consumer spending, and business investments— all of which could potentially impact travel spending.
Despite these economic challenges and the introduction of the ETA, the UK remains a popular destination for business and leisure travelers alike. The country’s rich history, vibrant culture, and thriving business environment continue to draw visitors from around the world. The new ETA system, despite its costs, is an important step towards ensuring the security and convenience of these visitors.