David Cogswell | June 20, 2016 8:15 PM ET
Here Comes Brexit – What's Next for Travel?
Here comes the Brexit vote, and no one, no one knows what is going to happen. The long-awaited day of decision is now on top of us. The British vote over whether to leave the European Union takes place Thursday. The unpredictability extends to the travel industry. When borders close up, travel is one of the first things to be affected, and not positively.
For many, the possibility of a British exit from the EU would be a signal that the EU is really crumbling. After all its problems, maybe it just isn’t strong enough to sustain the vision of a united Europe. The collapse of the EU and recalcification of borders definitely feels like a step backward for the travelers of the world. Travelers always saw themselves as citizens of the world. The EU seemed like a partial realization of the dream of a borderless world. Will it go forward or not?
If Britain’s population votes to stay in the European Union, presumably things will carry on in a more or less straight-line progression, as much as anything proceeds in a straight line in this wacky 21st century world. There is plenty of turmoil taking place already in the status quo of the European Union, without considering the effects of dismantling it.
The approaching referendum will have enormous repercussions. Even the possibility of the British exit has sent stock prices tumbling. The Federal Reserve, the high church of banking in the U.S., has held off on raising interest rates over concern about the possible exit.
The European Union is already reeling from economic shock waves proceeding from major defaults, its inability to balance its books and bring its diverse membership into economic synchronization, and an immigration crisis resulting from refugees fleeing the ongoing wars in the Middle East. A British exit would deal a body blow to the already reeling giant.
Britain is one-sixth of the economy of the EU. Even if it does not share the currency, it is a substantial part of the European economy. And beyond the strictly economic effect, Britain’s departure from the EU would seriously damage the EU’s credibility and the confidence in its capacity to continue.
As bad as the effect of the Brexit would be on the European Union, it would probably be even worse for Britain, as it loses the access to markets and other advantages that came with being part of the economic free trade zone.
German carmakers that have factories in Britain now, for example, may not find those factories as cost effective when the tariff-free trade advantages of the Union have been removed. That would remove thousands of jobs from Britain. Similar kinds of effects would take place across the economic spectrum.
If Britain leaves the Union, all the regulations of trade between the countries would have to be renegotiated. As bad as the Union may have seemed in many ways, the unraveling of it seems to be a step backwards.
Those Britons who want to leave say they want to restore British sovereignty and identity, some of which they believe has been lost with its becoming a member of a larger entity. Much of this feeling is stoked by the immigrant crisis and the tendency for people to use immigrants as a handy scapegoat when things go wrong, similar to what we have seen in this country. In times of political and economic turmoil, xenophobia raises its ugly head.
That tendency too, seems like a step backwards to a time when different countries and ethnic groups automatically regarded each other as if they were separate, and very likely enemies.
The Telegraph recently published an article enumerating problems the Brexit could cause travelers and the travel industry. It listed higher air fares and less effective security collaboration between countries. But most of the disadvantages for Britons would not affect American travelers.
As the grim day of decision approached I asked some tour operators what they thought. Are they concerned? It seems to cut right to the core of many of their concerns, their ability to move people easily from one country to another. The answer I got was a big ho hum.
Even those tour operators who are concerned about the well being of Britain or the EU did not extend that concern to their own businesses. If the value of the British pound drops, it will make Britain cheaper for Americans. Britain isn’t part of the currency or the Schengen Area, the 26-nation area with no requirements for passports at the borders. So that would not change. And passport controls have been going into effect in the formerly passport-free area as well.
“We don’t see this as a major impact for U.S. travelers,” said James Phillips, president of TravelBound. “In fact, Sterling would almost certainly steeply decline against the dollar, should Britain exit, meaning that travel to Britain could become an incredibly good value. Whilst overall travel to Europe has been a little more challenging this year – we have seen an uplift in our North American regional business and for travel to Asia, where we have 8,200 hotels, and this last week we saw a steep increase in bookings to Europe, especially to Italy and to the U.K.”
“Americans traveled to England when it took five U.S. dollars to purchase one British Pound, and Americans also traveled to England when it only took $1.20 U.S. dollars for a Pound,” said John Stachnik, president of Mayflower Tours. “England’s tourism draw will prevail, no matter what the outcome is for this week’s vote.”
And with stunning brevity, Bob Drumm, president of Alexander + Roberts, said, “We see no impact from Brexit at all.”
Then I realized, these guys are dealing with major turmoil and dislocation every day of their lives, or at least every time some crisis or another sends shockwaves through the travel industry. They are dealing with every crisis that comes along: tsunamis, financial crashes, terrorist attacks, wars, hurricanes. This is no big thing. For a tour operator, it’s just business as usual.
But as the election gets nearer, it appears that Britons are starting to move away from the relatively vague notions of sovereignty and cultural identity and looking back towards the pocketbook issues, e.g. the economic benefits of being part of the EU. So it may be that nothing will happen.
Then everyone can just go back to complaining about the EU.
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