It’s time to stop waving the Open Skies banner

by Grant Martin on

Listen up bloggers and analysts: it’s time to stop chanting the “Open Skies” mantra and telling Americans that they’re going to find a ton of budget fares to Europe. It’s not going to happen immediately and there will not be a huge stampede to buy bargain basement fares this month.

I keep reading and hearing journalist’s shallow reports about how increased demand with the Open Skies Agreement means fares are going to be super cheap this summer. Yes, the new pact means that more routes will be available between the US and EU. Yes, more supply usually means lower prices. But have you guys really looked at the data? Have you compared this year’s load and pricing data against the last few years?

I’ve been keeping track of transatlantic ticket prices for a while now and can tell you that the current market prices are not much different from last year. There may be small deviations above or below, but I’m sure those fit into the noise of a ten year average and are largely not a function of Open Skies.

The fact of the matter is, routes didn’t come pouring into the market like a tidal wave once March 31 passed. Airlines are carefully integrating their routes and planning accordingly with seasonal and passenger loads and aren’t going to be getting into a fare ware during peak season. Even if they do decide to bicker over a few routes, the 20% savings off a 1500$ ticket is still going to be significantly more than the 400$ that you’re going to pay in February.

Open Skies comes at a time when tourist season is kicking into gear and jet fuel is at an all time high. These two factors alone should be able to single handedly negate any increase in supply. To that end, once demand goes back down this fall and more routes come into effect, we may see a decrease in fares to a reasonable rate. But my prediction is it will be only then, well after this year’s season has ended.

As travel writers and analysts, we need to be cautious not to jump on the Open Skies bandwagon because our Econ 101 teachers told us that prices could go down or because we have an interview on local news. This is a multi faceted market where route volumes do not solely dictate the market price. Keep an eye on the numbers and jump up and down when the prices drop; until then, Open Skies is just a few extra planes flying over the Atlantic and hopes for a cheaper ticket some day.

Open skies agreement starts to bear fruit: Delta/KLM/Air France routes to open

by Grant Martin on

Much of the hullabaloo about the Open Skies Agreement between the United States and the EU died down after consumers realized that prices won’t be drastically affected. Despite speculation that 10£ transatlantic tickets were on the horizon, marketing and the low-cost-carrier airline network have a long way to go before we see anything like that.

Another benefit to the OSA though is the available collaboration among carriers for landing slots. Alliances such as Skyteam and Oneworld now can substitute their partner flights in place of older, less used routes. For example, if British Airways’ LHR-JFK flight isn’t doing so hot, they can cancel the slot and give it to Cathay Pacific for LHR-HKG.

Why do we care? This means alliances can shuffle volume between EU and transatlantic sectors and create more routes across the pond. In the most recent venture, Delta has teamed up with Air France and KLM, permitting Delta to use several of Air France’s hubs across Europe. Directly, this means more non-stop flights from the US to EU. I would venture that more supply means lower prices, but with the volatility in the airline market these days, who knows?