Market Intelligence Report – United Kingdom

The UK is now officially in recession for the first time since 1991. The Office for National Statistics reported UK GDP fell by 1.5% in the last three months of 2008, following a 0.6% decline in the previous quarter.

British house prices declined again with retail bank Nationwide reporting December house prices declined 2.5%, taking the 2008 fall to 15.9%.

The Bank of England has cut the UK base rate of interest by half a percentage point to 1.5%. It is the first time the rate has been set below 2% since the Bank was founded in 1694.

UK unemployment rose by 131,000 to 1.92m between September and November 2008, its highest since September 1997, according to the Office for National Statistics.

The Government has given the green light to a third runway at Heathrow Airport. The plans were approved along with a range of measures designed to limit the environmental impact of the new runway. Meanwhile, London mayor Boris Johnson has revealed plans for a new UK hub airport in the Thames estuary.

BAA’s seven UK airports handled 145.82m passengers last year, 2.8% fewer than in 2007. Heathrow handled 66.91m passengers last year (1.4% few than in 2007). In the month of December 2008 alone, a total of 10.18m passengers used the seven airports, down 6.9% year-on-year.

UK internet searches for flights have plunged by 42% over the last 12 months according to the latest Hitwise figures. Australia remains the most popular non-euro/dollar destination, accounting for almost a quarter of all searches for flights to destinations outside of the UK, US and eurozone. Searches for flights to Australia have fallen by 32.85% over the last 12 months, but this is at a lower rate than for many other destinations.

Retailer Marks & Spencer is closing 25 Simply Food and two main shops, resulting in the loss of 850 jobs, and will also cut 15% of its head office staff, taking total redundancies to 1,230.

VisitBritain expects visits to the UK from overseas residents to fall by 0.7% year-on-year to 31.7m in 2009. Preliminary figures for 2008 suggested a total of 31.9m visits from overseas residents, 2.7% few than in 2007. Meanwhile the organisation has been asked by the Government to draw up a list of action points to boost the visitor economy during the economic downtown.

According to ITB Berlin, the fallout from the global economic and financial crisis will tend to favour the growth of niche markets this year, in particular segments such as luxury travel, experience based adventures and cultural interaction. While sectors such as business travel, together with travel to meetings, conferences and incentive trips, will suffer.

Very few Brits intend to give up their summer holiday this year, although many will not book until after the peak January booking period, according to a survey from The Co-operative Travel. In a similar survey conducted by Holiday Autos of the 1,013 Britons surveyed, 95% plan to take a holiday in 2009, with 19% looking to take as many as four. To ensure they can afford to travel, 53% are shopping and eating out less, while 24% plan to cut down on excursions during their holiday to keep costs down.

A survey conducted by John Lewis revealed internet users prefer to search for a holiday by the best deal rather than by destination. Interestingly, the survey also showed that, although 17% of respondents said the fall in the value of the pound was a key holiday concern, few people put much time into researching and arranging currencies.

Long haul destinations such as Thailand and South Africa have been highlighted as being more affordable for UK travellers. South Africa, where sterling is still stronger than a year ago, is second only to Thailand in the best value barometer. Malaysia comes out as the third best value destination.

Qantas has extended its A380 network to the United Kingdom, with its A380 service between London and Sydney starting on 17 January 2009.

British Airways has revised its forecast for the year-to end-Mach 2009, blaming economic weakness and the fall in sterling. The airline has predicted a £150m loss.

Virgin Atlantic has unveiled a £6m advertising campaign ahead of its 25th birthday on 22 June 2009. The advert is set in 1984 and features music and icons from the era. Meanwhile, the airline has told staff they will not get an annual pay increase in March because of the economic downtown.

UAE carrier Etihad Airways has named Daniel Barranger as regional general manager for Europe.

Boeing will reduce its workforce by a total of 10,000 or 6% this year after announcing its annual net profit declined by a third.


Lithuania Airlines – flyLAL – has ceased operations after a planned buy-out of the carrier fell through. Almost 30,000 passengers with advance bookings will be affected.

Passengers in all classes on Singapore Airlines’ new Airbus A330-300s will be able to enjoy iPod and iPhone connectivity through its KrisWorld in-flight entertainment system. The airline is the first to offer the service in economy class.

Aldi Travel entered the top 10 most visited UK travel agency websites in its first few days of operation, according to Hitwise,

Global Travel Group chief executive Andrew Botterill has been appointed UK managing director of parent company, Stella Travel Services.

Travel agents are increasingly turning to commissions from non-air bookings to increase revenue, according to a report by Amadeus. Half of leisure agents surveyed said hotel bookings are the most widely requested of all non-air services, followed by cruise (40%) and airport transfers (25%). Agents polled felt that the success of non-air sales was primarily driven by the level of commissions offered by such service providers

Kuoni Travel reports has opened a new High Street Shop. The move is seen as very positive because travellers prefer face to face interaction and established brand assurances during troubled times.

Budget holidays continue to be the focus of the travel papers this month, with a focus on making holidays affordable particularly in non-Euro countries such as Croatia, Egypt, Turkey and Budapest.

Skiing and winter holidays also continued to be a focus this month.

On the back of Obama’s inauguration, there were numerous travel stories on visiting Washington.

Just two of the UKs nationally-audited newspapers grew their circulation year on year in December – the Sunday Times and the Evening Standard. The Independent suffered again this month, down more than 12% while its sister publication The Independent On Sunday was the biggest faller of any title, dropping 17.5% to 163,545.

The Financial Times is proposing to make 80 staff redundant – including 20 journalists – as the business daily feels the effects of the economic downtown.
Telegraph Media Group has outsourced subbing and layout of its weekend supplements to a production house in Australia. According to the Sydney Morning Herald, the move means that pages can be worked on overnight London time without having to pay overtime. It also reports that journalists in Australia tend to earn lower salaries and, because of the weak dollar, this works out at around a half to two-thirds of what is paid to colleagues in the UK.

There are reports The Sun is to cut the freelancer rates paid for stories and pictures. The Sunday Times meanwhile is cutting the rates paid to freelance writes by 10%, affecting those who submit copy ‘ad hoc’.