Economists agree that the last thing Europeans will give up in more challenging financial times is their summer holiday, which is why economists have often looked to forward bookings for summer holidays to gauge consumer confidence. It is therefore an important indicator (for the UK at least) that in 2019, there is an emerging trend for holiday markers to book long-haul destinations outside of Europe.
This trend has hit Thomas Cook (the largest UK tour operator into the EU) very hard of late and will not help the sale price of its airline in the short term. Thomas Cook holiday forward bookings for Turkey have increased by more than a third, while bookings for EU countries fall away. Other tour operators are cutting prices to entice customers to holiday in the EU.
The largest currency exchange outlet in the UK is still the Post Office and it has stated this month that sales of currencies such as Japanese yen and other APAC currencies have increased by double digits in 2019, as have sales of US dollars. Buried within that data is the revelation that sales of the Egyptian pound have increased by 687% year-on-year despite the UK, US, Canada and other countries all publishing travel advisories against Egypt. Can it be that a high percentage of the 26m annual flying UK summer holiday makers are seeking out countries with weaker currencies against GBP or is it that they are avoiding supporting the EU economy because of Brexit considerations? Forward bookings across the board for package holidays in the UK are down. Either way UK airlines are caught in a rapidly changing consumer environment.
The reason for Egypt’s traveller increase might in part be to the diversion of flights from Sharm el-Sheik (which remains under a direct travel ban) to Hurghada. The UK used to be Egypt’s largest source market but this collapsed by two thirds to under 400,000 after the Arab Spring revolution and the Metrojet bombing. EgyptAir is throwing three quarters of additional 2019 summer capacity between Heathrow and Luxor behind the expected resurgence in UK travellers. As such EgyptAir is gambling on the UK market being resurgent, the Egyptian tourist board is supporting this increase with additional UK advertising, but this makes the airline particularly susceptible to any terrorist actions.
All of this also shows that UK consumer confidence is strong, but airline route planners are being tested like never before as customer preferences become ever harder to predict. It could be argued that this trend reflects the generational change underway across the globe as the overriding influence of the post-war baby boomer generation begins to fade.