Consumers’ continuing voracious appetite for overseas holidays has been thrown into stark relief again in recent days.
easyJet last Wednesday revealed it had enjoyed a record summer. And pre-tax profits for the second half of its financial year to September 30, a period which obviously takes in the peak summer season, were a record £960 million. This was up £94m on the prior financial year. Second-half passenger growth was 7%.
The flow of good news from airlines and package holiday providers has continued in spite of the ongoing UK economic gloom.
easyJet’s announcement came hard on the heels of record results the previous week from airline and package holiday giant Jet2.
Chief executive Johan Lundgren will depart in early 2025, after seven years piloting easyJet, to be succeeded by chief financial officer Kenton Jarvis.
From both easyJet and macro perspectives, what was particularly notable in the airline’s announcement was the strength of its package holidays business.
The easyJet holidays business posted a 56% hike in pre-tax profits to £190m for the year to September 30.
John Moore, senior investment manager at stockbroker RBC Brewin Dolphin, observed: “Demand for holidays continues to prove resilient, despite fears over the pent-up demand from the pandemic dissipating and the cost of living crisis taking its toll on household spending.”
And Mr Jarvis declared: “Travel remains a firm priority with consumers.”
Jet2’s chief executive, Steve Heapy, made a similar observation the previous week.
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He said: “Even in difficult economic times, the annual overseas holiday remains a highly valued and eagerly anticipated experience, often taking precedence over other discretionary spend.”
Mr Heapy’s comments came as Jet2 reported a 16% rise in pre-tax profits before foreign exchange revaluation to £772.4 million for the six months to September 30.
And Jet2 was upbeat about the outlook.
It revealed that average package holiday pricing remained “resilient”, increasing by 6% to £904 per person in the six months to September from £855 in its previous first half “as supply-led inflationary increases were passed on”.
My column in The Herald last Wednesday highlighted the importance of continuing strong demand for overseas travel not just for airlines and holiday companies but also for airports, including those in Scotland, and the economies around them.
Moving into the political sphere, the continuing difficult relationship between the Scottish Government and business was the subject of my Friday column in The Herald.
This was written in the context of the impending Scottish Budget, which takes place on Wednesday.
Businesses and households alike will be keeping a close eye on this, with public finances at a UK and devolved level having been hit so significantly by major policy errors under the Conservatives at Westminster, from austerity to Brexit.
On the wish list of many Scottish businesses, once again, will be some relief on the business rates front.
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Recent appeals from hospitality, retail and leisure businesses for relief of the kind that has been extended south of the Border have fallen on deaf ears. We will find out on Wednesday if they have done so again.
That said, the importance of Scotland’s small business bonus scheme in exempting so many businesses from rates altogether must not be forgotten amid the general furore.
In last December’s Scottish Budget, then deputy first minister Shona Robison noted the small business bonus scheme had ensured that “100,000 properties are taken out of rates altogether”.
That is certainly not a number at which we should scoff.
The column highlighted the emphasis by Kate Forbes, Deputy First Minister and Cabinet Secretary for Economy and Gaelic, on the importance of business and the economy, when I interviewed her in June.
Asked then whether she saw it as difficult to balance maximising economic growth with social justice, Ms Forbes replied: “No, it is not difficult to balance at all. I have never seen even an iota of difference in our desire for resilient public services, for eradicating child poverty, for protecting our environment, and our economic objectives, for the very simple reason that we can’t achieve those objectives without economic growth. So when I look at our mission to eradicate child poverty, clearly we are investing substantially in the Scottish child payment. That investment comes through progressive taxation because of a growing and thriving economy but it can’t happen without the creation of well-paid, secure jobs, and that is where a growing economy creates the jobs.”
She added: “In terms of every single one of our public services, their resilience requires us to be generating public revenue that comes from businesses doing well, bluntly, and we are then able to reinvest that.”
First Minister John Swinney has also highlighted the economy as being among his key priorities.
However, a survey published in October by the University of Strathclyde’s Fraser of Allander Institute showed 9% of firms north of the Border agree that the Scottish Government understands the business environment in Scotland, compared with 64% of businesses that disagree.
These percentages matched those in a survey published by Fraser of Allander in August last year.
My Friday column in The Herald observed: “You get the impression that, even if business got everything it wanted from the Scottish Budget on business rates and more, which you would imagine it will not, there would not be any kind of sudden thawing of its relations with the Scottish Government.”
Clearly, the Scottish Government has an uphill task in winning over the business community. It is a task which you would imagine might at times feel more like an impossibility.
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