Where did all the bargain fares to Europe go?

by George Hobica on

Will this be the summer of our discontent when we search for cheap airfares to Europe? Is the party over?

In January 2009, US Air kicked off the summer selling season with tax-included fares for peak summer travel to Europe in the $500’s and $600’s but that was nothing compared to the $200 and $300 fares that appeared later in the spring and summer.

But that was last year. The winter just ending is the first time in memory that we didn’t see dead-of-winter deals to Europe. In winters past, the airlines went into panic mode, selling fares for February travel for as low as $250 or $300 round-trip including taxes, even on nonstops from New York to Paris. This winter, however, fares remained stubbornly stuck in the $600’s, $700’s and even $800’s to most destinations, although there were a few fleeting $500 bargains to such places as Dublin, Barcelona and Madrid.

Even Frankfurt, typically the cheapest gateway to the Continent, saw no amazing deals as in past winters.

So what’s going on here, and how does this bode for travel this spring and summer?

Of course, only fools dare to predict how an irrational airline industry will react, so we’ll steer clear of hard and fast prognostication. However, the bargain-less winter does not give us much hope.
But we will say this: many European governments have increased airport taxes, as outlined in this New York Times article on the subject, which reports that a $458 fare from New York to London recently came saddled with $162 in taxes and government fees.

And it may only get worse. The British government, for example, currently adds an Air Passenger Duty of £45 in economy class, but this will rise to £60 on Nov. 1, and £90 on business and first class fares, scheduled to increase to £120 on the same day.

In addition, many airlines have cut capacity and grounded jets for the duration, which will put pressure on fares. Last July, British Airways announced it would slash winter capacity by 4-5%, grounding over a dozen planes.

Adding to our misery, the weak dollar has enticed bargain-hunting Europeans to visit the U.S. Those shopping bag-toting hordes are driving up demand and fares along with it, taking seats that we were hoping to get for next to nothing.

Currently, spring and summer fares to most European destinations are running in the $900 to $1500 range, including tax. That’s still less than what we saw in summer 2008, when it wasn’t unusual to cough up $1900 and $2000 on economy class fares for peak July and August dates. Even so, we would be very surprised if at some point there isn’t a brief, hit-and-run sale on some routes. So our only advice is to sign up for fare alerts (http://www.airfarewatchdog.com/fare-alerts/) and jump if such a sale does come to pass.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

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Five predictions for the European travel market

by Tom Johansmeyer on

The end of the year is the time for all kinds of predictions for the next one. Usually, I treat such conjecture as the bullshit that it is, but when PhoCusWright puts out a list of what’ll happen for the travel market, I tend to take it a little much more seriously.

The worldwide recession is still squeezing the European travel market, but the online sector is likely to be the star next year, as it was in 2009. Consumers are turning to the web more and more to book their travel in Europe, and this will have a profound effect on how travel products and services are sold.

1. Up a third: PhoCusWright forecasts that the online segment of the travel market will hit 34 percent of the entire industry in Europe in 2010. Customers will turn to the internet to find better bargains, accelerating the shift from offline to online. At the end of 2008, online accounted for only 28% of European travel sales.

2. Priceline’s the one to beat: Priceline has lagged the three largest online travel agencies – Expedia, Orbitz and Travelocity – for years, but Priceline has seized some serious market share through the travel recession, due in large part to its acquisition of European company Booking.com. Priceline could take the #2 spot next year and will be well-positioned for the future.3. Metasearch arrival: Finally, there will be a solution to the fragmented online travel market! PhoCusWright forecasts the growth of sites that search across sites, which makes sense given that financial concerns are driving travel buyers to the web instead of traditional venues. There’s demand already, and economic conditions will feed the trend.

4. Big in Germany: Germany’s been gaining ground in the European travel market. In 2008, the country was responsible for only 17 percent of the space. Look for it to hit 20 percent by 2011, PhoCusWright says.

5. Look south for sunshine: Online penetration has topped 40 percent in the United Kingdom, and France and Germany are making progress. The easy wins are in the past. So, the travel business is looking toward the emerging travel markets of Europe: in the south and east.

There’s plenty on the agenda for the European travel market next year. Even in what will continue to be a tight economic environment, there’s plenty of room for growth. No doubt, the most important factor will be the recession, which will shape travel company behavior by driving buyers to seek better deals. The perception that online is the place to save will accelerate the push to electrons.

Europe tells several different online travel stories

by Tom Johansmeyer on

The EU may have brought us closer to having one Europe, but there certainly isn’t one European travel market. The latest report from travel industry research firm PhoCusWright sees the French market staying flat through 2011, with strong growth occurring in Germany. In the United Kingdom, the travel business will continue to tighten. Meanwhile, the mouse-clickers are in Scandinavia, which is leading the charge in online bookings.

The UK, France and Germany dominated the online leisure and unmanaged business travel market in 2008, accounting for 67 percent of all bookings. But, the UK’s position has been eroding and will continue to do so for the next two years. In 2008, it accounted for 31 percent of the leisure and unmanaged sector online, but PhoCusWright forecasts a drop to 26 percent by 2011. Blame the value of the pound for that one: devaluation will contribute to an erosion an actual buying activity. France owned 19 percent of this market in 2008 and isn’t likely to change. The real growth story, among the largest markets, is Germany. In 2008, it represented only 17 percent of the leisure and unmanaged business market … but PhoCusWright expects it to hit 20 percent in 2011.

Online penetration is greatest in Scandinavia, which now leads Europe. In 2008, this corner of Europe passed the UK, with 45 percent of travel booked online in Scandinavia compared to 40 percent in the UK. And, it isn’t slowing down. Click-and-buy is expected to break the 50 percent mark in 2010, while it will take longer for the UK travel market to get there. France’s online penetration is only 30 percent, with Germany at 24 percent but growing.

Europeans complain about U.S. travel fees

by Tom Johansmeyer on

Extra fees charged by airlines, the “new normal,” are so popular that the U.S. Department of Homeland Security has gotten into the game. And, bitching about these fees is equally popular, prompting the European Parliament to sound off like its members are Ryanair passengers with full bladders and no coin for the slot.

At issue is a planned $10 charge for Europeans coming to the United States. The European Parliament calls the charge unfair, saying it amounts to a new visa restriction. Enrst Strasser, a lawmaker from Austria, says that the requirements for entry under the Obama administration are even harder than they were under the previous (U.S.) government and that for us is a contradiction that we in the European Parliament cannot accept,” Austrian lawmaker Ernst Strasser told Napolitano during a special hearing with her. “We really have to insist on our European values, that European data protection laws and European civil liberties also have to be taken account of.”

Janet Napolitano, Homeland Security Secretary, calls the fee reasonable, since the United States doesn’t have an agency for travel and tourism, “unlike many of your countries,” she said of the European states. The $10 fee would be used to “fund and help tourists and travelers who wish to come to the United States.” Since budgets are constrained at both federal and local levels, Napolitano feels this is a reasonable move.

The money has to come from somewhere, and if Washington has to choose between taxing Americans and taxing everyone else, who do you think wins? Napolitano may not be an elected official, but her boss sure is. There’s a pretty clear need for travel-related revenue in D.C., and the government needs to invest in promoting visits from overseas. When people cross a border to come here, that’s a net inflow of money into the United States.

Despite European objections, the numbers suggest that this isn’t a bad idea. Foreign spending in the United States has fallen for the past year, with drops becoming particularly severe last spring and continuing without reprieve. From August 2008 to August 2009, spending by visitors from other countries fell 21 percent, marking the fourth consecutive month of declines worse than 20 percent.

When it’s time to pass the hat, nobody wants to reach into his pocket.

EU rules on liquid carry-ons may become “fluid”

by Tom Johansmeyer on

Grab a drink, if you feel inclined … in Europe, at least. The European Union is getting ready to lift the ban on liquids in carry-ons. The target date is still pretty far in the future, because the technology the EU plans to use isn’t widely available yet. Originally, the prohibition was supposed to expire in April, but now it’s looking like no later than 2014.

Okay, so don’t rush to celebrate the change.

That being said, the EU’s transportation officials are pressuring the technology companies involved to move quickly.

The rules against liquids in containers larger than 100 ml and not in clear bags have been in effect for three years, after a terrorist plot was uncovered in Britain. The perps were planning to use liquid explosives in soda cans.

Now that everyone’s safe, we’re also free to gripe about what we can’t take on board – not to mention longer waits at security checkpoints. Progress may be slow, but at least it’s happening. Let’s give a nod to innovative thinking, with a technological solution being devised to give us back some of our time without compromising our security.

If you need action sooner, there’s a chance that the rules may be eased a bit for duty-free liquids bought outside the EU.