Features

In focus

29 Jun 2012 by Alex McWhirter

Currency turmoil in the Eurozone means business class passengers flying long-haul can make huge savings by starting their trip where the price is right.

At the time of writing in early June, it was impossible to predict whether or not Greece would quit the euro or, indeed, what the future prospects were for any, or all, of the eurozone countries. But the economic woes in the eurozone and the expectation that the euro itself will lose value against other leading currencies will allow travellers to make savings by choosing one country over another.

Over the years, a number of our readers have taken advantage of lower ticket pricing in mainland Europe. A further advantage for UK-based passengers is that they save twice over. They pay less for their tickets and avoid air passenger duty (APD) because they depart from an airport outside the UK.

Let’s take a typical transatlantic saving possible from Amsterdam. The Dutch city is, for most UK readers, the most convenient departure point for a long-haul flight owing to its ease of access. In the case of a trip to New York, a business class passenger flying with British Airways out of Amsterdam via London would pay €2,888 (£2,331), compared with the UK price of £4,720 direct from London. These prices are quoted by ba.com and are based on booking a week ahead for travel during June that would not involve a Saturday-night stay.

How about Rome? Using the same booking criteria, a French executive will find that he or she can fly with Air France to San Francisco for half price provided the trip starts in Rome rather than Paris. Bought in Rome, the Air France business ticket (via Paris) costs €3,613 on airfrance.com. Direct from Paris, it costs €7,279.

Or how about Athens? Although the Greek capital may be less convenient as a departure point, the potential for savings is greater. An executive flying Athens-Tokyo in business class via Frankfurt or Munich with Lufthansa pays €2,440 on lufthansa.com. If they were to book straight from Germany they might have to fork out €4,777, almost twice as much.

If Greece were to ditch the euro in favour of the drachma then the currency might, according to financial pundits, plunge in value by 40 or 50 per cent. But if the airlines were not to raise their Greek fares to compensate for the devaluation, then Athens would become Europe’s – if not the world’s – bargain-basement centre for air tickets.

It could be that readers have business or personal interests in these countries, in which case these itineraries can easily be accomplished. It could also mean your entire trip is more cost-effective. If not, you must first buy a separate one-way ticket to your chosen EU departure airport.

The latter’s ticket coupons must then be used in the order they are issued. In some cases, you can break your journey on the way home depending on tariff rules, but travellers using loyalty schemes are advised to use the final coupon at some stage, otherwise the airline might come after you.

THE COST OF CRISES

How can the cost of tickets vary so much between countries? Until the late 1970s, when IATA (the International Air Transport Association) policed the aviation business and its travel agents, this situation would never have arisen. In those days, IATA controlled all ticket pricing. The idea was that there would be little variation between individual countries so one country or one airline would not have a competitive advantage over the other.

When currency values shifted, IATA member carriers readjusted their prices in line with the new exchange rate. Liberalisation as we know it today did not exist. Competition was limited. Almost every European carrier was an IATA member and its rules were meekly obeyed. Those who disobeyed were heavily fined and, in the case of agents, could lose their licence to trade.

There is none of that today. Airlines tend to price according to what the local market will bear. Only if a significant devaluation were to occur would fares be adjusted in line with currency values.

That situation has not happened in the EU – yet. But during the 1997 Asian financial crisis, the Thai baht halved in value, while the Indonesian rupiah sank from Rp 2,600 per US$1 to Rp 14,000 per US$1 in 1998. To protect their earnings, the airlines pulled flights and some asked people to pay in US dollars. Hopefully that scenario will not be repeated in Europe.

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