Monday, 18 April 2016

Air fares fall but Brexit threat casts shadow

Image courtesy Gatwick Airport
The average price of flights from UK airports to the top 20 destinations searched by Britons using the search engine fell by 10% in the first three months of this year, compared with the same period in 2015, according to the company. But can these halcyon days of cheap travel survive Brexit?The figures corroborate my earlier report that this promised to be something of a vintage year for bargain fares following a remarkable increase in new low cost routes and a general sharpening of competition between airlines. Falling fuel prices are also likely to have made an impact. Within Kayak's average prices to 16 of those 20 destinations fell, some by significantly more than 10%. Unsurprisingly in the light of recent terrorist attacks those to Istanbul plummeted by 31%. It seems contradictory, therefore, that those to Paris actually rose by 1%. Fares to to Berlin were down by 23%, to Dubai by 17% and New York by 15%. Those to a clutch of cities - Los Angeles, Dublin, Hong Kong, San Francisco - dropped by 13%. However, prices to Barcelona rose by 5% and it was also 5% more expensive to fly to London from other UK airports. The threat of a decision by the UK electorate to leave the EU casts a long shadow over the current, rich choice of cheap flights. After an initial transition period following Brexit, the UK Government would need to renegotiate its open skies agreement with the EU. As William Keegan noted in a cogent Observer newspaper column, our current European partners are fed up to the back teeth with Britain's ambivalent attitude to the EU and would n to give us an easy ride if we pulled out. From long experience I can assure readers that there is no political football more worn by kicking than civil aviation. If we want to preserve the right of UK based airlines to operate freely anywhere in the EU, as they can now, it is extremely unlikely it will be granted without quid pro quos. Loss of that right would his airlines' finances and could mean the withdrawal of some routes. The huge range of flights launched to destinations in central and eastern Europe would also be at risk if free movement of labour were ended. Many of those routes - such as those to and from some Polish cities - are sustained by migrant workers. Finally the US has an open skies agreement with Brussels. This allows airlines on either side to operate between any airport in the EU and any airport in the US. It's far from an ideal treaty because it favours American carriers, which are able to operate intra-European services while EU airline may not do the same on US domestic routes - long a sore point this side of the Atlantic. Nor are EU carriers able to buy controlling stakes in US carriers. But in the event of Brexit Britain would need to renegotiate with Washington and the EU either the maintenance of the states quo or some entirely new treaty. And, again, renegotiation could reduce opportunities for new trans-Atlantic routes. These are uncertain days indeed.

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