GIBRALTAR: Visit Gibraltar

Tourism in Gibraltar constitutes one of the British Overseas Territory's most important economic pillars, alongside financial services and shipping.

Gibraltar's main attractions are the Rock of Gibraltar and its resident population of Barbary macaques or "apes", the territory's military heritage, duty-free shopping, casinos and marinas.

Although the population of Gibraltar numbers only some 30,000 people,the territory recorded nearly 12 million visits in 2011,giving it one of the highest tourist-to-resident ratios in the world.

The Government of Gibraltar has sought to develop the tourism sector to replace Gibraltar's former dependence on the British military, its chief economic mainstay until cuts in the UK's Ministry of Defence budget led to the gradual run-down in the military presence after the 1980s.

Gibraltar's marinas one of which was the first to have been built in the region have made Gibraltar an important hub for sea transport for over 50 years.

A tourist boom began in the mid-1980s but stalled by the end of the decade before being boosted again in the mid-1990s by a programme of Government investment and marketing.

The building of the new Gibraltar Cruise Terminal, a new airport terminal, pedestrianisation of key streets, redevelopment of historic buildings in the city centre and improvements to tourist attractions elsewhere on the peninsula have helped to increase tourist numbers considerably since the turn of the 21st century.

For much of Gibraltar's history as a British territory, its economy relied on its dual status as a key British military base and a trading entrepôt at the entrance to the Mediterranean Sea.

Tourism first became significant between the two World Wars and expanded considerably after World War II due to the opening of Gibraltar's first marina, built in 1961, as it was the first in the region and began to attract increasing numbers of yachts and cruise ships.

Gibraltar's tourist trade was devastated by the Spanish government's 1969 decision to implement a total closure of the Gibraltar-Spain border as a consequence of the political dispute over Gibraltar's status.

Visitor numbers collapsed over the subsequent decade.The border was not reopened but partially) until 1982 and was finally reopened fully on 5 February 1985.

A flood of visitors poured into the territory after the border reopened; 45,000 people entered Gibraltar within the first week, rising to over 10,000 per day over Easter 1985.

Within only six months, a million people had visited, rising to two million by the end of the year.

Air traffic doubled as tour operators began offering packages combining Gibraltar with the Costa del Sol.

By 1986, five million visitors a year,60,000 weekly were arriving in Gibraltar.

The airport resumed its role before the frontier closure of acting as a gateway to the Costa del Sol; 90,000 visitors came by air annually, of whom 22,000 headed on to the resorts of the Costa del Sol.

To make room for the expected flood of visitors' cars on Gibraltar's crowded roads, 1,000 old vehicles were rounded up and pushed off the cliffs into the sea at Europa Point at the southern tip of the territory.

Despite this drastic measure, parking spaces were in critically short supply as over 1,000 vehicles per day entered Gibraltar after the reopening of the border.

The territory enjoyed a retail, accommodation and catering boom, though it came at the price of chronic traffic problems and threats to the environment, notably disturbances to the macaque and bird populations.

The number of macaques grew very rapidly as a result of illegal feeding by tourists, which also led to an increase in aggressive behaviour as the monkeys came to associate humans with food.

The problems culminated in 2008 with the Government of Gibraltar ordering the culling of a rogue group of monkeys that was breaking into hotel rooms and scavenging in bins in the Catalan Bay area.

The cull was protested by researchers and animal rights campaigners but was justified by the Government on the grounds that the overly aggressive monkeys would frighten tourists and cause damage to the economy.

The running-down of the British military presence in Gibraltar in the 1980s and 1990s forced the territory's Government to carry out a major shift in its economic orientation, with a greater emphasis on encouraging tourism and establishing self-sufficiency.

By this time, however, tourist growth had stalled with hotel bed occupancy in the territory at under 30% in 1993.

Tourism became an important issue in the elections of 16 May 1996.

The newly elected Chief Minister, Peter Caruana, pledged to revive Gibraltar's faltering economy by expanding the tourist trade.

The new Government carried out a programme of improvements to the port facilities including the construction of a new passenger terminal to welcome cruise ship visitors.

New marketing initiatives were established, such as Gibraltar joining the MedCruise Association to help promote the Mediterranean as a cruise destination and establish common standards for port facilities.

£5.2 million was invested in improving the airport terminal, while Main Street was refurbished and pedestrianised. A number of old garrison buildings were redeveloped for leisure and retail use, notably the area around Grand Casemates Square, which was formerly used as a car park.

The tourism improvement programme led to a major increase in visitor numbers, which rose from four million in 1996 to seven million in 2001 and overnight stays also rose by 30%.

By 2006 tourism contributed more to Gibraltar's economy than any other sector,with visitors spending an estimated £279.41 million in 2011.

In 2014, a popular newspaper placed Gibraltar on its list of 10 most "disappointing" tourist locations.

In 2011, 11,940,543 visitor arrivals were recorded in Gibraltar, of whom 11,424,581 arrived by land, 351,534 by sea and 164,428 by air; the number of land arrivals excluding cross-border workers was 9,616,781.

Visitor demographics are dominated by day-trippers from neighbouring Spain,90 per cent of visits are made on excursions from Spain, either local Spanish people or Britons visiting or residing in Spain, many coming from the nearby Costa del Sol.

A smaller number of visitors, mostly from the United Kingdom, stay for at least one night in the territory.

The average stay is 4.1 nights as of 2011.Tourism is generally year-round thanks to Gibraltar's hospitable climate, with the August peak only about 50% higher than the January low.

The numbers and relative proportions of visitors have changed considerably over the last 40 years.

During the years of the closure of the land border, the majority of visitors arrived by sea. The number arriving by sea remained fairly stable until the mid-1990s but has grown considerably since then due to an increasing number in visits from cruise ships, over 100 of which now visit annually.

The number of arrivals by air rose through the 1980s to a peak of 62,438 in 1989 but stagnated for some years afterwards, rising only to 66,219 in 1996.

Numbers increased substantially during the 2000s as low-cost airlines Monarch and EasyJet launched flights to the territory.

As of 2011, air arrivals constitute only about 1.4% of all visitors, down from 38% in 1974 during the frontier closure.

Both air and sea traffic is dominated by British visitors; over 80% of departing air passengers leave for the UK, while 93% of cruise passengers are also British.

By contrast, nearly 80% of day visitors by land,thus effectively 80% of all visitors are Spanish nationals.

Gibraltar's tourist trade is hindered by a number of factors. The small size of the territory means that there is an acute shortage of land for expanding tourist facilities and major pieces of infrastructure such as the Gibraltar airport.

Accommodation constituting hotels, guesthouses and self-catering facilities is consequently limited.

Smuggling between Gibraltar and Spain remains a source of tension between the two governments and occasionally leads to long delays for vehicle traffic crossing the border during Spanish Civil Guard crackdowns.

The ongoing political dispute with Spain has also hampered the development of transport links.

It was not until as recently as December 2006, following the signing of the Cordoba Agreement, that direct flights between Madrid and Gibraltar were re-established, Air traffic had previously been obstructed at previous times, flights to and from Gibraltar were not even permitted to fly over Spain as the Spanish did not recognise the British sovereignty over the land where the airport is located and demanded a joint operation of it and the right to treat the airport as a domestic Spanish facility.

The Gibraltarians resisted this as a de facto breach of their territorial integrity and sovereignty.

Since the 2006 Agreement between Britain and Spain, air travel to and from Gibraltar has been conducted without hindrance.

Brexit Affects Commercial Aviation

The United Kingdom (UK) has voted to leave the European Union (EU). The so-called “Brexit” is the culmination of years of building anti-European sentiment in the UK, and it will immediately trigger a two-year negotiated exit from the EU once the Prime Minister formally invokes Article 50 of the Treaty on European Union (TEU). While the consequences of this decision naturally have a major impact across Britain’s society and economy, the impact on aviation will be particularly acute.

The gating question for how large the impact of Brexit will be on British aviation is whether UK will remain a part of the European Common Aviation Area (ECAA), which includes all of the EU member states as well as Norway, Iceland, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, and Kosovo. Right now, as an EU member, British carriers may fly any route to and from any country in the ECAA (e.g. London – Athens), any route between two separate countries in the ECAA (e.g. Paris – Milan), and even domestic routes within any country in the ECAA (e.g. Berlin – Munich). Of course the same right applies to other European airlines (hence Ryanair’s massive operation at London Stansted).

Europe is by far the largest market for most UK airlines, whether through routes to and from the UK for the likes of British Airways and Monarch, or from bases in Europe for low-cost carriers (LCCs) like EasyJet. This makes maintaining access to the ECAA absolutely critical, and there is certainly a precedent for non-EU members to gain access to the ECAA. As long as Britain maintains access to the ECAA, the overall effects of Brexit would be muted, though the question of outside bilateral agreements would be solved separately. Moreover, the ECAA would require Britain to continue complying, to a certain extent, with EU aviation law.

While the EU is the primary market for UK airlines, it is by no means the only one, and right now the UK latches onto several open skies and bilateral agreements that the EU has signed with other countries, including notably the United States and Canada, with initiatives underway to expand access to Turkey, China, Brazil, and ASEAN (a conglomerate of Southeast Asian countries). With or without access to the ECAA under Brexit, the UK would likely need to either negotiate continued access to these bilaterals via negotiation with the EU, or enact its own bilateral agreements with these countries.

As now the UK has voted Brexit, here is some risk of losing access to the ECAA. In particular, a precursor to participating in the ECAA is “close economic cooperation” with the EU, which means a rather broad alignment with EU economic policy (including regulations). One of the big selling point for voters who supported the “leave” option is the potential for eliminating the most cumbersome of EU economic regulations, and indeed this is where a large part of the case for Brexit boosting long run economic growth. If Britain holds its ground on regulatory matters and negotiations with the EU turn acrimonious, its airlines could find themselves unceremoniously booted from the ECAA altogether.

The biggest losers in such a scenario would be the UK’s Low-cost carriers, particularly EasyJet, which has bases and routes all throughout Europe, the majority of which do not touch the UK at all. Without a strong bilateral access, it would be unclear whether EasyJet would be allowed to persist as an entity (in all likelihood its UK entity and European entities would have to be spun off from each other, with the latter transferred to new, European ownership). This would be a disastrous scenario for EasyJet, particularly if accompanied by bilateral uncertainty.

The effects are likely to be more mixed for the UK’s primary full service carrier, British Airways, as its focus is more on longer distance routes from its London Heathrow hub that would likely be maintained outside of the ECAA. Virgin Atlantic, without a short haul network in Europe at all, would be even more insulated. The flip side is that British Airways is more dependent on business travel, which would suffer in the wake of a likely post-Brexit recession (particularly on its European network), and Virgin Atlantic would see similar effects.

For British Airways, the other risk comes in the form of its parent company, International Airlines Group (IAG), which now includes Spain’s Iberia, low-cost carrier Vueling, and Ireland’s Aer Lingus. IAG’s transnational holdings structure is only allowed as a result of the EU’s existence. IAG has generated significant benefits for British Airways, many of which would disappear if British Airways was forcibly spun off in the wake of Brexit.

In general terms, Brexit would cause plenty of harm to Britain’s full service carriers. The one saving grace for the airlines (though certainly not one for consumers), is that Britain might be able to negotiate more aggressive bilateral agreements that curtailed access for the so-called Middle East Big 3 (or perhaps for all but IAG investor Qatar Airways). Perhaps of more interest would be restricting LCC Norwegian Air Shuttle from flying long-haul, low-cost routes at London Gatwick. The long arc of protectionism would be an easy temptation for a Britain without the shackles of the EU (fitting tonally with “Leave”proponents,) but would be a disaster for consumers.

Beyond the airline industry, there are also aerospace considerations from Brexit, in particular the British operations of Airbus and the entirety of Rolls-Royce. These would be affected less by the specifics of the ECAA and more so by whether Britain remains a part of the European common market. As long as it remains, the impact on British aerospace industry would be limited. But if Britain exits the common market, it could wreak on Airbus for a while, and push the European airframer to shift jobs back to the continent.

The overall question of Brexit’s impact on British aviation and aerospace really depends on how severe Brexit actually is. If Brexit is more bark than bite, and the UK complies with the provisions to remain in the ECAA and common market, there will be almost no effect (perhaps a marginal decline in tourism as a result of having to obtain a visa). Conversely, if Britain is booted from the ECAA and common market, it would mean a massive upheaval for its airlines and aerospace companies.

UK: Monarch Positive On 2016 Despite Delayed Bookings

British airline and travel group Monarch expects demand to grow next year, even though customers were delaying decisions on where to go because of security concerns.

Privately-held Monarch said it expected to report annual underlying earnings (EBIT) of more than GBP£40 million (USD$60 million) for the year ended October 31, after a turnaround plan helped it recover from last year's GBP£94 million loss.

Monarch, which competes with the likes of Thomas Cook and TUI, said in a statement that further progress was expected this year, calling the outlook for the winter good. "We do expect 2016 to be better than 2015," chief executive Andrew Swaffield told reporters.

The company's financial recovery comes despite Monarch being forced to cancel flights and packages in Tunisia and Egypt this year after the British government raised concerns over safety in the wake of attacks.

London Luton-based Monarch sells holidays and flights primarily to British holiday-makers travelling to destinations such as Spain, Italy and France. Since being acquired by Greybull Capital in 2014, it has focussed on cutting costs by shedding staff and ending loss-making routes.

Swaffield said the halting of holidays to Egypt's Sharm al-Sheikh resort and the Islamist militant attacks in Paris, both last month, meant customers were booking later, in line with what travel companies usually see after such incidents.

"There's an initial lack of bookings and then people get back to normal, but they don't book as far in advance as they normally do," he said.

That was in line with what other airlines such as easyJet have reported in relation to the attacks.

Monarch said in the absence of Tunisia and Egypt as destinations, its customers were booking flights to places such as the Eilat resort in Israel, adding mainland Spain and the Canary Islands were also popular.

British airlines and travel companies are waiting for the UK government to confirm it is safe to fly to Sharm al-Sheikh again. Monarch has cancelled its programme there until January 6.