Guest blog post by Mike Gooley, Chairman of Trailfinders
I cannot imagine that the cost of longhaul travel and holidays can ever be lower in real terms than it is at this moment of time.
At least this is the one bright spot resulting from the downturn of the economy. It has forced all travel providers, particularly airlines, hotels and car hire companies to pare their margins to the bone and offer exceptional value in order to stimulate travel.
How long this advantageous situation will last for travellers is guesswork but the time must come when margins are restored to give providers a return.
Recent years have seen a surge of new hotels and resorts being constructed around the globe with no shortage of investors encouraged by earlier growth. This increase in capacity matched by ever higher standards of accommodation has now naturally slowed right down in response to steep falls in occupancy.
As with the airlines, who withdraw routes and park aircraft when demand falls, the fall in new rooms being built gradually allows the rates to be restored as availability becomes a factor again. This process has already started but I believe there will still be exceptional bargains for the rest of 2009 with the market readjusting as we go into 2010.
The make-up of airfares becomes year by year ever more complex and providers are obliged to collect more than 400 associated taxes worldwide. As a current example a return economy flight to Los Angeles with British Airways at £352 involves £97 in taxes made up as follows:
UK – Air Passenger Duty £40; Passenger Service Charge £21.20 (APD set to rise to £45 in November and again to £60 in 2010).
USA – Civil Aviation Security Service Fee £1.60; Arrivals Tax £20; Animal and Plant Health Inspection Fee £3.10; Immigration Fee £2.80; Passenger Facility Charge £4.30; Customs User Fee £4.00.
Of the remaining £260 for the provider of this 10,942-mile flight, £137 is designated as a fuel and security surcharge – leaving only £123 classified as pure air fare. It has to be said that the fuel surcharges introduced over 5 years ago have become more of a cost effective way for airlines to adjust fares, as aircraft have always needed fuel.
It is some comfort that Trailfinders, unusually, absorb all credit card fees for our clients.
The predicted loss for the world’s airlines this year is US$9,000,000,000.
Taking all this together one can certainly presume that prices have bottomed out and the traveller can enjoy for the time being the best value travel ever.
A window of opportunity – enjoy!
Mike Gooley, CBE, Chairman, Trailfinders
