Europe: Book Now or Wait?

When to book an air ticket, especially when future posted fares are high, has always been a tough question to answer. This year, with conflicting pressures on airlines and consumers, it’s even tougher. One reader recently asked it this way:

“Do you expect airfare costs from the USA to Europe to decrease significantly as of April since the new open-skies pact comes into place? Or will any potential competitive airfare wars be muted by rising gas prices? Should one book summer travel to Europe now or wait until April?”

My short answer is that nobody knows for sure how the marketplace will play out the rest of this spring and summer. My overall recommendation is this: Don’t obsess about finding the absolutely lowest airfare. Instead, if you see a good deal, grab it, but if you don’t find one, wait.

Beyond that, I can respond to at least some portions of the reader’s question in greater detail.

Open skies

So far, all of the action resulting from the European open-skies agreement has been directed to business travelers. That means flights from various U.S. cities to Heathrow in London and flights from Europe to New York. Specifically, we’ve seen proposals floated for new all-business-class flights between London and New York, and several big U.S. lines have switched their London flights from Gatwick to Heathrow or added Heathrow flights. None have added new U.S. or European cities so far. And fares were already pretty much deregulated even before the agreement, so open skies by itself is having no effect on fares.

Unfortunately, open skies has generated no new low-fare initiatives&#8212no transatlantic routes by U.S. or European low-fare lines and no new startup proposals. I’d be amazed to see any such development the rest of this year. On balance, open skies to Europe has been a bust at the low-fare end of the scale. The main benefit of open-skies agreements may well surface later this year to Australia, where some real low-fare expansion is likely.

Airline costs

By now, everyone on the planet knows that fuel prices are high and may be going higher. That means that average airfares have got to keep pace. In addition, U.S. airlines are facing wage pressures from the pilots, mechanics, and others who took pay cuts during recent bankruptcies. Moreover, many large airports are hiking their local-user fees.

Overall airline costs will increase, across the board. The only question is when and by how much the airlines will tweak their fare structures to accommodate higher costs.