Sometimes, my timing is just plain screwy. I post my predictions about the possibility of fares dropping and then @myTransponder on Twitter informs me that some airlines are cutting their fuel surcharges on Europe flights. BestFares has a great chart showing the reductions.
Most of the cuts are in the 17-18% range, but according to the article there hasn’t been a reduction from some Northeast cities to London (not sure if a new press release from BA will affect that figure that much) and to German cities.
Of course, I am happy about the drop. It’s always nice when air travel becomes more affordable. The drop is a bit higher than I expected yesterday. But there are a few things to consider. This drop in fuel surcharges is still less than the decrease in the price of oil. For many markets, the fuel surcharge is still double what it was last year, even though oil was trading in a similar range a year ago.
The BestFares article also mentions the recent gains made by the dollar:
The Euro is also down from its summer high by approximately 18%. The English pound is now at a five year low. Last November, travelers needed to pay $2.10 for a pound. This past week, we saw the pound as low as $1.68, a drop of almost 25% in less than one year.
With airfares now dropping to Europe and currency exchange between 18 to 25% less, Europe is starting to look like a bargain compared to those who visited Europe in summer 2008.
The currency issue, at least in terms of the euro, does not seem to be a big issue to me. While the dollar has certainly made some gains in the past couple of months, it is only up 4.29% on the year. And while the gains against the pound are a bit more impressive, I’m not sure if that’s enough to change demand. (Where does the article come up with a 25% decrease in the pound? It mentions the prices of $2.10 and $1.68…which is 20% to me unless I’m making some dumb math error.) While I have read the argument that a stronger dollar will encourage travel to Europe, I think it goes both ways, and that it also discourages travel from Europe to the United Sates.
Anyway, it’s nice to see fuel surcharges come down a bit.
I think about currency exchange when I travel. I haven’t traveled to Europe in 2008 and I tell people that I won’t go when the USD is more than $1.40 per Euro.
I have been planning this trip to Canada and I don’t know what to expect with the wild currency fluctuations. Friday it was 1US=1.17CAD, then Monday 1.15CAD and now Wednesday 1.18CAD.
In July the Canadian dollar was 1.00, equal to the USD. Canada seems like a bargain today, but what about two weeks from now. In real terms, I like the idea of only spending $1000USD rather than $1,200USD.
Euro travelers may just go to Canada where the exchange rate has only changed about 1% compared to the big changes against the USD.
Next time I go to Europe I too will think of the exchange rate. Sadly when I went in April it was a school trip so I was kind of stuck.
I do think the currency could have an effect…but I think some forget that it can work both ways. Right now I’m not sure about the euro’s effect, though. The currency has made some nice gains over the summer but for the year hasn’t moved that much overall. In your $,1000 example it’s only about a $50 difference.
Thanks for stopping by, Ric!
I am still to see these fuel cuts to other (non-Europe) destinations. With US airlines so far in the red, they are not going to give up on their surcharge revenue anytime soon.