Uncertainty Rules as Business Travel Industry Sorts Through Brexit Implications

Update July 14, 2016: Britain's Conservative party leader Theresa May took the helm as Prime Minister Wednesday. Despite her position in the "remain" camp prior to the Brexit referendum, she repeated her mantra "Brexit Means Brexit" in a televised address and outlined her intentions to move forward with the process of leaving the European Union. May appointed David Davis, former shadow home secretary, as the newly titled Secretary of State for Exiting the European Union.

Travel industry players are gathering their wits as news of the United Kingdom's vote to leave the European Union sinks in. The immediate impact on Britain has been painful: The pound sterling fell to its lowest level since 1985; investors fled the British stock market, seeking stability elsewhere; Prime Minister David Cameron, who opposed Brexit, resigned, saying Britain needed a leader that could better carry out the will of the people.

Effects of the vote outside the United Kingdom will play out over time but already have begun to take shape economically and politically. Stock markets fell dramatically across Western Europe and were trending downward in the United States by midday. Nicola Sturgeon, the First Minister of Scotland, whose voters were largely determined to remain in the EU, said a referendum to exit the United Kingdom was back on the table. Across the channel, Brexit has emboldened similar stances from France's far-right National Front party and the Netherlands' Party for Freedom, as well as others in Denmark and Sweden, plus Italy's 5 Star Movement to separate from the euro.

Business Travel Impact

As talk of redrawing maps and shifting currencies escalates, uncertainty in the travel industry is a given. What happens to border control rules for business and leisure travelers? Visas for expatriate workers? Will United Kingdom-based airlines remain subject to EU regulations? Will U.K. citizens maintain EU passenger rights protections? Will Open Skies agreements with the United States be extended to the United Kingdom? How will new trade agreements affect business travel demand overall? All of these questions have to be answered as Britain negotiates its exit terms.

EU officials said they are ready to start unwinding the United Kingdom from its membership, invoking Article 50 of the Treaty of Lisbon, which lays out a two-year timeline for separation. For the moment, however, travel process and route access changes are not imminent, according to government officials. "There will be no initial change in the way our people can travel, in the way our goods can move or the way our services can be sold," Cameron reassured the British public immediately following the referendum results.

That's the message travel management companies are driving home to their clients, as well. American Express GBT issued the following statement this morning: "Following the UK's decision to exit the European Union, it is important for the business travel community to remember that nothing is going to change overnight. The EU, the UK and our sector are now facing a period of uncertainty. There will be a prolonged period of negotiating the UK's exit from the EU, during which time we expect conditions for travelers to remain the same."

BCD Travel echoed those comments later in the day: "Reports indicate that the U.K. withdrawal process from the EU will be gradual and complex. Existing trade and immigration rules will remain in place while negotiations on exit terms take place over the next two years. We remain firmly committed to supporting clients' growth and success by supporting their programs and travelers. … It's too early to predict specifics today."

There is a growing sentiment, however, that new regulatory, trade and immigration agreements could be brutal for the United Kingdom as the EU sets an example for other exit-minded members. "None of us know how that will work out," said Paul Tilstone, founder and CEO of London-based business travel consultancy Festive Road. "We are all hopeful that it will be as attractive to the EU as it is to the UK to make that as painless as possible to make sure we can trade freely. But we are hearing on the television that it could be just the opposite. It could be made very painful in order to dissuade other EU members from going down the same referendum pathway."

In one bright spot, the U.S. Travel Association noted that visa programs between the United States and the United Kingdom will not change. "Visa agreements are bilateral between countries, so our mutual visa agreements with Britain will remain the same, regardless of membership in the EU," USTA's Patricia Rojas-Ungar wrote on the organization's blog. "Aside from effects on the value of the pound, there should be no impact on British citizens’ interest or ability to come to the U.S."

For its part, the Global Business Travel Association underscored its advocacy for free movement and business continuity. GBTA executive director Mike McCormick said in a statement, "GBTA remains committed to the same principles it always holds strong: ensuring business travelers maintain freedom of movement, business is not disrupted, travel infrastructure remains strong and programs and bilateral agreements that facilitate safe and secure travel like the EU-US visa waiver exemption continue."