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It’s not just the political hot potato of where to build a new runway that will rumble on, argues Rob Gill – there’s plenty more for agents to deal with as we take off into a new year
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The biggest issue in 2016 – at least in theory – will be the government’s decision on what to do about airport expansion in the south-east, following the Airports Commission’s recommendation that Heathrow should be allowed to build a third runway.
The government had originally promised a decision by the end of last year, only for prime minister David Cameron to decide at the last minute that a new study was needed on the environmental impact of a new runway.
This latest delaying tactic was not surprising as the Conservative party is deeply divided over the issue, particularly on Heathrow expansion with several high-profile ministers, including foreign secretary Philip Hammond, against the third runway.
There is also the small matter of the London mayoral election on May 5 where the Conservative candidate is MP Zac Goldsmith, one of the most outspoken opponents of Heathrow expansion. Current London mayor Boris Johnson, another prominent Heathrow expansion critic, is expected to be given a cabinet role when he relinquishes his mayoral responsibilities which will further ramp up the pressure on the PM.
Quite how Cameron, who himself promised there would be no new runway at Heathrow in 2009, will resolve this issue will be one of the biggest stories this year or maybe he will find a way to kick it into “the long grass” again, which would be much to the travel industry’s general annoyance.
In the meantime, expect Heathrow and Gatwick to continue their public slanging match over the environmental impact of new runways.
Even if the government finally makes a decision, legal challenges are sure to follow. Not to mention the budding row over who will pay for a new runway. Heathrow’s biggest operator, British Airways’ owner IAG, has already vowed not to fork out for it, while Gatwick’s number one airline easyJet doesn’t want a second runway at the West Sussex airport.
Operators and the industry in general are waiting to see what happens with the Foreign Office advice to key destinations such as Tunisia and Sharm el Sheikh in Egypt. Currently the FCO is advising against all non-essential travel to Tunisia, while the UK government has banned all flights to Sharm.
Operators are predicting that the east Mediterranean, particularly Turkey, could have a difficult year due to its proximity to the civil war in Syria.
There has been a definite shift in capacity towards the western Med, both from tour operators and cruise companies, for 2016 – particularly to Spanish destinations including the Balearic and Canary islands – which are seen as more of a “safe haven” – with Portugal also expected to do well.
In the long-haul market, Cuba is set to be a destination to watch as many UK holidaymakers may want to visit before the island starts to change in the wake of the “normalisation” of relations with the US after more than 50 years.
Another destination in the spotlight will be the Central American country of Costa Rica – Thomson began flying to the destination this winter while British Airways is due to start flights from Gatwick in May 2016. Peru should also benefit from new BA flights from Gatwick to Lima starting in May.
As well as Peru and Costa Rica, Kuoni is predicting a revival in sales to Kenya following the relaxation of FCO advice. The operator is also expecting strong sales for Vietnam, Mauritius, South Africa, Antigua, India, Burma and Japan.
Now that the various branches of the European Union have finally signed off on the new Package Travel Directive, replacing the previous 1990 directive, the focus will switch to how the UK government will draw up new legislation to implement the elements of the directive, such as the new linked travel arrangements.
The burden of doing this is likely to fall on the Department for Business, Innovation & Skills and the Department for Transport.
The industry will be anxious to find out how the government proposes to make changes to the Atol scheme including the current Flights Plus arrangements.
The government has two years to implement legislation that meets the requirements of the PTD. Even though the changes will not come into force until the end of 2017, Abta has urged travel businesses to begin preparing for the changes, particularly those who use dynamic packaging or Flight Plus.
Making a profit of £19 million after tax in 2015 may not sound like a big deal but it was a significant milestone in the financial turnaround of Thomas Cook, which nearly collapsed in 2011. It marked the first time that Cook made a profit since 2010 and the company said it was “well positioned for growth”.
Cook will hope to build on this positive momentum during the peak-booking season – its UK bookings for winter 2015-16 and summer 2016 were already up by 8% and 5% respectively by the end of November.
Life has been much smoother in recent years for Cook’s arch-rival Tui Group, and 2015 was the first full year following the merger of Tui Travel and Tui AG in December 2014. Pre-tax profits rose from €499 million to €535 million and the group is anticipating underlying earnings before interest, taxes, and amortisation to grow by at least 10% in its current financial year. Tui’s joint chief executive and industry legend Peter Long is due to step down from his position next month when Friedrich Joussen will be appointed as the company’s sole chief executive.
Last year was another busy year for M&A deals and the hotel sector could be one to watch in 2016.
The $12.2 billion deal for Marriott to buy Starwood will have to be cleared by regulators and should be completed by the middle of the year if it gets the green light. There has also been much speculation about the future of InterContinental Hotels Group with rumours about a possible sale or merger.
On the tour operator side, Tui Group is looking to sell its online accommodation specialist Hotelbeds Group.
The airline industry has already seen major consolidation in the past five years but there may still be deals to be done. IAG boss and serial airline purchaser Willie Walsh has declared that he is still looking for airlines to buy following last year’s purchase of Aer Lingus – a Latin American carrier may be in his sights.
This year will see a total of 27 new ships being introduced, including 9 ocean-going ships and 18 river cruise vessels, which will add a total of 28,500 new beds to the global cruise market.
One of the biggest launches will be Royal Caribbean’s Harmony of the Seas, which is due to make its debut in Southampton in May. The newest Oasis-class ship will be first to feature the children’s interactive aqua park Splashaway Bay. The 16-deck vessel will have capacity for 5,479 passengers.
Royal Caribbean is also due to launch Ovation of the Seas, its third Quantum-class ship, in spring 2016 which will be based year-round in China.
A major development in the UK cruise market will be the debut of Thomson Cruises’ biggest ship, Thomson Discovery, which will enter service in June. Thomson hopes that the 1,800-capacity ship, which was formerly Royal Caribbean’s Splendour of the Seas, will help it to attract younger cruise customers.
Viking Ocean Cruises will launch its second ocean ship, Viking Sea, while Holland America, Carnival, Regent Seven Seas and Seabourn are also due to unveil new ships this year.
River cruise operators Ama Waterways, Avalon Waterways, CroisiEurope, Scenic, Tauck, Uniworld and Viking River Cruises are all launching new ships in 2016.
The biggest sporting events of the year will be the Olympics in Rio de Janeiro and the Euro 2016 football tournament in France. The Olympics takes place in the Brazilian city from August 5-21 with the Paralympics being held on September 7-18.
Euro 2016 runs from June 10 to July 10 at venues around France. England, Wales, Northern Ireland and the Republic of Ireland have all qualified for the tournament, which may distract consumers from booking their holidays in the early part of the summer.
For golfing fans, the biennial Ryder Cup contest between Europe and the US will be held in Minnesota on September 30-October 2.
