25th May 2020

Air travel clampdown produces a silver lining

The current clampdown on international air travel has produced a silver lining for the UK Balance of Payments in the form of a reduction in the country’s trade deficit by an estimated £3 billion a month.

Figures published last week [Friday 22 May] by the Office of National Statistics (‘ONS’) show that the UK posted a record trade deficit of £33.9 billion on international tourism in 2019. This is more than £2 billion above the 2018 figure which was itself a record tourism trade deficit.

UK residents made 93.1 million visits abroad last year, spending a total of £62.3 billion overseas whilst overseas residents made 40.9 million visits to the UK, spending £28.4 billion.

The net result was a £33.9 billion deficit in the UK Balance of Payments.

Just 9.0 million of the 93.1 million overseas visits by UK residents in 2019 were for business purposes.

Brian Ross, Deputy Chairman of Stop Stansted Expansion (‘SSE’) commented: “The current pandemic has an endless list of negative impacts upon peoples’ lives and livelihoods but the impact on international tourism is undeniably good news for the Balance of Payments. This is, of course, at the expense of countries such as Spain, Greece and Italy who are losing billions of euros in revenue from UK tourists.”

It remains unclear as to how long it will take before there is a meaningful resumption of international air travel and overseas tourism. Restoring consumer confidence will be particularly challenging.

New guidelines published last week [20 May] by the European Aviation Safety Agency (‘EASA’) state that passengers will need particular reassurance that filtered air on airplanes is safe. However, there is still no guidance from EASA on the testing and certification of aircraft air conditioning to measure its effectiveness in filtering out particles as small as bacteria and viruses.

Brian Ross concluded: “The general expectation is that it will take several years to restore consumer confidence in international air travel and overseas tourism. The upside is that the UK Balance of Payments account is already seeing the benefits and the UK domestic tourism economy should benefit once we can all safely get moving again within the UK.”

NOTES

  1. The ONS ‘Travel’ Trends’ information for 2019 was published on 22 May 2020 and can be found at: https://www.ons.gov.uk/peoplepopulationandcommunity/leisureandtourism/articles/traveltrends/2019 There is a useful summary of the UK’s 2019 trade performance in a House of Commons Library report dated 13 May 2020 at https://commonslibrary.parliament.uk/research-briefings/sn02815/
  2. The ONS figures include expenditure in the course of visits by sea and tunnel, as well as by air, but air accounts for 88% of the total. Cross-border travel in Ireland is excluded from the ONS data.
  3. In 2019 UK exports amounted to £699 billion compared to imports of £725 billion resulting in a trade deficit of £26 billion with a £130 billion deficit on goods offset by a £104 billion surplus on services. Without international tourism, the UK would have posted an overall trade surplus of £7 billion.
  4. The new EASA guidelines, “Covid-19 Health Safety Protocol” were published on 20 May 2020 and can be found at: https://www.eraa.org/sites/default/files/easa-ecdc_covid-19_operational_guidelines_for_management_of_passengers_final.pdf

FURTHER INFORMATION AND COMMENT

Campaigning against proposals to expand Stansted Airport