EU and US Visa-agreement turns sour
Early this month the European Parliament ruled that visa-free travel for Americans visiting the European Union should be temporarily suspended. The vote is a tit-for-tat reaction: while the US offers visa-free travel to EU nations in principle – it applies some exceptions – which means there isn’t full reciprocity.
March 2017 | by Garry Stasiulevicuis, President
Citizens of Bulgaria, Croatia, Cyprus, Poland and Romania cannot enter US territory without a visa, while US citizens can travel to all EU countries visa-free.
The move by the European Parliament raises the stakes in an already febrile travel scenario – and it has implications for the duty free and travel retail channel if tourist numbers fall. It comes at a time when the US administration continues to push for an executive order banning the nationals of six instead of seven Muslim-majority states from visiting the US for three months (Iraqi nationals have been spared this indignity in the rewritten EO, but not the citizens of Iran, Somalia, Sudan, Yemen, Syria and Libya).
There is some evidence that since the fiasco of the original Trump EO (which was also blocked by US courts) there has been some global slippage in travel intentions to the US – and from Western Europe in particular. Data from ForwardKeys suggest that global US air departures booked from 1 March to 31 May are down by -9% whereas before the ban they were projected to be up by +20%.
A stark turnaround of fortunes…
If played out in the coming months, that is a stark turnaround, which bodes ill for travel and tourism and for DF&TR around the world given that Americans are the largest travelling nationality.
Data from CiR Business Lounge indicates that American air travel to EU countries rose by +4.4% year-on-year in 2016 to 12.8m. The major Western European nations took the lion’s share, with the UK easily the favourite destination with 4.2m visitors, almost double Germany’s 2.3m.
This year, our (pre-March) forecast for Q2 2017 (based on scheduled seat capacity), puts the growth to the EU even higher at +5.5%, a large influence here being the strong US dollar versus both the euro and the UK pound. The top EU airports that currently get major retail benefits from US travel across the Atlantic are (in order): London Heathrow (LHR), Paris (CDG), Frankfurt (FRA), Amsterdam Schiphol (AMS) and Dublin (DUB).
However, if visa restrictions are put in place, Americans may opt for other destinations. This is at a time when duty free retailers were expecting to reap the rewards of the exchange differential in the hope of countering some falling spend per pax from other high spending nationalities such as the Chinese. So what is the likelihood of visa restrictions for Americans being introduced by the EU?
Parliament ‘urges’ Commission to adopt legal measures
While the European Parliament vote has no legislative weight, the body is pressing the EU’s executive arm, the European Commission, to act quickly and press for full US-EU visa reciprocity.
In an unequivocal statement, the Parliament said: “The EU Commission is legally obliged to take measures temporarily reintroducing visa requirements for US citizens, given that Washington still does not grant visa-free access to nationals of five EU countries.” The Parliament has urged the Commission to adopt the necessary legal measures “within two months”.
Some may see the European Parliament’s decision as a reaction to the Trump administration’s actions on travel which have been condemned in many quarters including the UNWTO. It is no secret after all, that relations between the EU and the US are a touch frosty right now.
Indeed there has not been much sign of a thaw, and the situation has likely been a trigger, given that the row over the visa reciprocity has been going on for more than a couple of years and could have been acted upon much earlier than now. According to the visa reciprocity mechanism, if a third country does not lift its visa requirements within 24 months of being notified of non-reciprocity, the EU Commission must suspend the visa waiver for nationals of that third country for 12 months.
In fact, a notification of non-reciprocity was sent to the US on 12 April 2014, so technically the Commission should could have reacted in April last year, but took no legal measures then. Four other countries were also notified in 2014: Australia, Brunei, Canada and Japan. Australia, Brunei and Japan have since lifted their visa requirements for all EU citizens, and Canada, which still imposes visa requirements on Bulgarian and Romanian citizens, says it will lift them on 1 December 2017.
So the stage is set for yet more turbulence in the air travel market in 2017. It looks like travel retailers in Europe will have to be extra vigilant in monitoring the nationality flows and pax numbers they serve. As well as staying on top of currency and economic swings, the effects of government policy on both sides of the Atlantic are also very much in the mix this year.