Don’t tell me the cost of travel is climbing as well as everything else?
Well, it depends on where you’re flying and when. But it is true to say the price of some flights and some routes has taken off since the US and Israel launched their attack on Iran 10 days ago.
What flights and what routes are you talking about?
Anyone travelling to Asia and Australia from Ireland in the weeks ahead will most likely have to avoid the hubs of Dubai, Abu Dhabi and Doha. They will have to go via one of the European hubs to one of the Asian hubs and then on again if they’re heading down under. Already many flights on those routes are around 20 per cent dearer than two weeks ago and worse is coming.
What do you mean?
Most carriers using hubs outside of the Middle East were pretty full before the crisis began so all the cheap seats have now been snapped up. Anyone looking to travel west to east might be forced to consider business class tickets, which are wildly expensive and beyond the means of most of us.
But that’s the only bad news right?
Wrong. Qantas Airways and Air New Zealand said on Tuesday they‘re putting their fares up directly as a result of the conflict in the Middle East.
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Why are they doing that?
There are several reasons including the significant curtailment of flights in and out of the Middle East, hubs both airlines frequently used to ferry passengers to and from Europe. The soaring price of fuel has added to the pressure. Jet fuel prices, which were between $85 and $90 (€73-€77) per barrel before the conflict are now between $150 and $200 (€128-171).
What about other airlines and short haul routes?
The Irish Times contacted both Aer Lingus and Ryanair to get a sense of where their prices might be going but at the time of writing had not received any response.
That doesn’t sound great?
It’s not be as bad as you think. Both airlines have hedged a considerable percentage of their fuel to cover the summer at prices that are significantly below current market levels. That will protect them and their passengers from immediate shocks.
How much have they hedged?
“A goodly percentage of Michael O’Leary’s fuel has been hedged at $69, which looks very clever now although it did not look so clever when fuel was priced at $62,” says travel writer and owner of trade publication TravelExtra, Eoghan Corry.
He says Ryanair’s hedging policies set a trend for other European airlines. “That will mean it will be a fairly okay summer for Europe in general and for Irish people going to Europe if things don’t get prolonged.”
That is good news?
It is but it comes with caveats. Fuel costs are not the only thing impacting prices. The basic laws of supply and demand are also likely to be a factor. There’s likely to be a reduction in the numbers travelling from Ireland to the Middle East, Asia and Australia in the weeks ahead. That could see increased demand for short haul flights to popular sun destinations in southern Europe which could see prices climb.
And how high?
“Prices might go up but not to really exorbitant levels,” Corry says. “We might be looking at increases of between 10 and 20 per cent.”
What happens if the conflict lasts longer than US president Donald Trump claims it will?
“Long-haul routes are going to be reshaped by this and not to the consumers’ benefit,” Corry warns. Around 100,000 people go on holidays to Australia and New Zealand from Ireland every each year with many using the Middle East.
“That market is going to be seriously disrupted unless the hubs reopen. Going through Heathrow or Amsterdam and on to Shanghai or Malaysia or Singapore adds another stop and having two stops doesn’t excite people as much. They might put up with a one stop on a comfortable airline but won’t put up with two,” Corry continues.
What about tour operators?
Well they only make up around 10 per cent of the travel business out of Ireland and a fairly high percentage of their holidays for the months ahead will have already been sold, limiting the impact the conflict will have in that space. “We’re not seeing any increases by Ryanair or Aer Lingus right now,” says president of the Irish Travel Agents Association Tom Randles. “You can still get a seat on the most popular routes to Spain and Portugal for the summer for around €100 each way mid-week and that is normal for this time of year.”
What about the longer term?
Everything is up in the air. If the conflict ends quickly then there could be a glut of empty planes and hotels with rooms to shift but if the war goes on or worsens then oil prices will stay elevated and aviation routes will remain disrupted.
So, bottom line, I have a holiday booked for Spain but no flights. Should I book them now?
We can’t say for sure but it might be a good idea as while prices may or may not climb dramatically in the weeks ahead they are unlikely to fall.
