The UK economy surprised everyone with the latest data that showed that it unexpectedly returned to growth in May, fuelled partly by a boom in summer holiday bookings. ONS data revealed that UK GDP rose by 0.5% in May, after a revised 0.2% decline in April. Economists had expected zero growth amid fears over the impact from the cost-of-living crisis.
Despite the gladly received news of a rise in activity, the latest snapshot highlights a decline in consumer-facing services driven by falling retail sales, and whilst the much-feared UK recession did not begin as soon as we anticipated, it does little to dispel worries about the outlook. Alberto Lopez Valenzuela, Founder & CEO, alva explains that the bigger picture is that the economy could be just 1% bigger next year than it was in 2019, before the pandemic.
For the UK travel industry, one that predominantly relies on sales from the peak summer season, there are additional worries. After the hammering the sector is receiving over the ’summer of travel chaos’, how can it rebound?
Across the industry the consensus is that the peak summer holiday period is going to obviously be tough. Before we even hit August 1st airline strikes, flight cancellations, missing luggage, staff shortages, and a refuelling crisis have kept the sector in the news but for all the wrong reasons. The sector is already battling with what seems like a different daily crisis as it struggles to stay afloat of the demands of the peak summer season. Heathrow has just announced a daily cap of 100,000 passengers until September 11th and up to 1,000 more flight cancellations, it is likely other airports will follow with their own heavy-handed restrictions.
Damaged economy
By the autumn, airlines and airports hope the crisis will start to ease. In a normal year, passenger numbers at Heathrow typically fall by about 1.5 million in November compared with peak summer (August). This year the seasonal fall in passenger numbers may well be even greater. Against this rocky terrain, the UK economy is heading for a challenging winter with the prospect of an impending recession still heavily looming. Whilst the seasonal fall in numbers may give the sector a chance to catch its breath, reboot and solve many of the problems that have arisen this year – the damage to the economy, reputationally and in fiscal terms, may be too late.
Since the start of the year the aviation industry has been open that it wouldn’t be able to cope with the increased demand created in part by the easing of COVID-19 travel restrictions, unless it received help to offset one of its biggest issues – chronic staff shortages, caused mostly by the letting go of over 30,000 skilled staff as a direct result of the pandemic. Whilst this is evidently true, the sector has come under fire for what some say is a clear lack of preparedness, with airports and airlines failing to gauge the surge in travel demand as well as overbooking of flights, this coupled with the increasing union action over poor working conditions and pay has cast a dark shadow over the whole sector that it may struggle to recover from for some time.
Whilst there is talk about the damage the issues in the sector have done to UK PLC, it would be unfair to say it is purely the UK arm of the travel sector has performed poorly, this is clearly not a standalone issue in the UK. Union action across Europe – specifically in France, Spain, Italy and Ireland – is planned over the summer months, adding more turmoil to the already fragile sector. Clearly the deep-rooted issues around working conditions and pay need addressing on a much more global scale to fix these problems.
Whilst 2022 has very much become the year of the union boom, it is fair to say that in the UK, the transport and travel sectors have been most widely affected by this growing unionisation. Underlying the strike action is a wider movement created by the pandemic that has seemingly impacted the aviation sector the most. ‘The Great Resignation’ has created a significant shift in the employee / employer relationship that has left employers scrambling to retain and attract talent.
The jobs market has been overhauled and now employee confidence is at an all-time high. New job openings have meant that if employees are unhappy where they work, there are plenty of options to move elsewhere and not settle for less than the pay and conditions they expect. What became clear earlier this year is that this is exactly what employees in the aviation field have been doing. Many were lured away by better pay, better conditions, and less stress, not just by rival firms but also by completely different sectors all together.
Survival of the fittest
As the sector tries to tackle the unionisation issues as well as attempting to survive the summer months with as little corporate damage as possible, the refuelling crisis will create a wider issue by winter and almost certainly guaranteeing higher airfares. To navigate all these issues, and ones that are no doubt still to emerge, a secure corporate strategy to manage losses, maintain productivity, crucially uphold reputation is needed by all. It will be vital that the same mistakes do not appear again next year and all staff and union issues in particular are sorted. If recruitment is kept up, by spring 2023 all the issues with delays and cancellations could be over and reputationally, the damage inflicted to UK PLC may start to be repaired.