Brits set for summer of air travel chaos

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4th July 2022

Bite-sized business news from the UK and beyond

Good morning Would you sign up to a 50 year mortgage…with the rest of your family? Intergenerational, half century loans are reportedly one of the ideas the government is considering to fix the housing crisis. The scheme, already popular in Japan, would see people buying a home with little or no expectation of completing mortgage repayments during their lifetime. Instead the property and outstanding debt would be passed on to their children.

Today's stories

Brits set for summer of travel chaos
US stock markets suffers worst start to the year in over 50 years

TRAVEL
Brits set for summer of travel chaos

What happened?
Travel chaos is expected across airports in UK and Europe this summer as a surge in passengers for the peak holiday season poses a major test for the aviation industry after two years of pandemic disruption.

For the first summer holiday since 2019 Covid restrictions have largely been lifted
But unfortunately for Brits eager to travel abroad, the industry is struggling to cope with the demand with reports of long queues at airports and last-minute flight cancellations.

Even though passenger numbers are still 14% below pre-Covid levels, airlines have not been handling the volume well.

This week a round of flight cancellations are expected as a government grace period, that allows airlines to change schedules without facing a potential penalty, comes to an end this Friday.

It’s hoped this will mean less last-minute cancellations and more certainty for travellers.

How did we get here?
Labour shortages have a lot do with the current situation. During the pandemic the aviation industry lost thousands of workers as companies downsized or they left the sector completely. Many of those workers haven’t come back, leaving a chasm between resurgent demand and the employees available to meet it. It’s estimated that the industry is 20-30% below the pre-pandemic staffing level.

Industrial action is also spreading as workers demand better conditions and increased pay to keep up with soaring inflation. Ryanair, easyJet and British Airways staff have all voted for strikes that will affect flights across the continent.

On top of that, Covid is still around and the recent uptick in cases has led to an increase in staff absences.

The government has faced criticism for not doing enough to support the industry
In response it’s announced a 22-point plan to address the chaos. Measures include helping to recruit and train staff, ensuring the delivery of a realistic schedule and speeding up security checks for new workers. But it’s likely that these actions will take time to work through meaning that travel disruption will continue long into the summer.

Other stories to keep you in the loop

Worse to come for food price rises, warns industry
Klarna valuation crashes to $6.5bn from $46bn
Top City legal firm freezes junior salaries in first sign of hiring slow down
Google’s new UK HQ – as long as the Shard is tall
FBI adds ‘Cryptoqueen’ to 'Most Wanted' list after alleged $4bn fraud

STOCK MARKET
US stock markets suffers worst start to the year in over 50 years

What happened?
The US stock market just put up the worse first-half performance since 1970. The S&P 500 index lost almost 21% in the first six months of the year.

The S&P is officially in a bear market, defined as when an index falls more that 20% from its most recent peak. The other major US index, the Nasdaq, is having an even worse time dropping more that 30% since peaking in November.

Weighing down the indices have been big name tech stocks which have had a torrid 2022. Netflix is down 71%, Meta -52%, Amazon -38% and Apple -25%.

The UK market, in comparison, has fared much better in part due to the lack of tech firms. The FTSE 100 lost just 5% in the first six months.

How did we get here?
Investors have been rattled by the US central bank’s efforts to cool down the economy by raising interest rates to counter soaring inflation. The war in Ukraine has also added to geopolitical uncertainty and investor concerns over a global economic downturn.

Looking ahead: Fortunately past performance isn’t necessarily an indicator of future performance. Back in 1970, when the S&P lost 21% in the first half and there was also a period of high inflation, it bounced back to gain 27% during the last six months of that year.

Stat of the day

In the first three months of 2022 Brits saved £4.5bn compared to the peak of £75.5bn during 2020's first Covid lockdown

Interesting links from around the web

61 healthy breakfast ideas to start the day right
Day in the life: A tech employee in Chicago describes her day at “work.”
The power of quiet leadership

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Brits set for summer of air travel chaos

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