Seat 2B By Joe Brancatelli
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Now Is the Time to Book Flights to Asia or Europe
September 8, 2016 -- I had dumplings and noodles on my mind when my family rolled into our favorite restaurant on Labor Day. But the owner, an elfish former scientist, would have none of it.
"My wife's in China!" he called from across the room as we grabbed a table. By the time he reached us, he had explained that his wife, known around our part of the world as Chef Jenny, had returned to the far northern city of Harbin on short notice to visit her family.
"Do you know how much she paid?" he asked with as much passion as a retiring retired scientist can muster.
"Maybe not so much," I said. "About $750? Fares are really low right now."
The owner smiled. "Six thirty-five!" he said with glee. "Can you believe it? It's amazing. She got all the way to Harbin for $635!"
I could believe it because just a few days earlier I'd helped a friend and his wife score a pair of tickets to Italy from Boston. They'd been dutifully squirreling away credit card miles to pay for the flights. But nonstop fares were so low (about $700 each roundtrip) that they paid cash instead and saved the miles for when the pricing environment turns nasty again.
What, you may wonder, is going on? How can flights halfway around the world be so cheap? And how can you score similar bargains?
Let me answer the last question first. As you can see from the chart, bargains are literally everywhere across the Atlantic and Pacific. If you're planning to visit Europe or Asia in the next few months, chances are good that you'll pay less than any time in a decade. Fares may even be cheaper than the chart indicates. In recent week, dedicated bargain hunters have turned up sub-$400 fares to Europe and equally mind-boggling prices to Asia. So if you're thinking of flying before Thanksgiving, now's the time to look and now's the time to book.
Business class bargains are harder to find and even more evanescent. We may see more in the weeks ahead, however. Last October was when British Airways unleashed a head-scratching premium class sale that, for a few glorious days, drove prices up front down to coach levels.
Domestic fares aren't quite as eye-popping as the international coach prices, but you'll find plenty of bargains. You'll have less luck in South America or the South Pacific, but there are astounding prices to Africa via Europe from carriers such as KLM and Lufthansa.
Why are fares so low? A confluence of factors that have turned the pricing regimen on its metaphoric head.
Travel has slowed. After several years of robust expansion, travelers aren't flocking to the skies quite so enthusiastically. Blame terrorism or weak economies or a strong dollar that has depressed inbound travel to the United States. Fewer travelers mean more empty seats and more airlines willing to discount to fill those empty chairs.
Oil is still inexpensive. When oil prices first fell, travelers were furious that airlines didn't lower fares. But as oil stayed low and travel stalled, airlines began discounting lustily. "Jet fuel is so cheap that our cost structure allows us to cut fares and still make money," one airline executive told me. "At these prices [for jet fuel], it's cheaper to fly the planes and generate revenue than to put them on the ground."
Discounters have gone international. With the notable exception of Icelandair, discount carriers traditionally were reluctant to leave their home markets. No more. Southwest Airlines is expanding rapidly to Mexico and the Caribbean. JetBlue Airways is already a major player to and from Latin America. Norwegian Air Shuttle, once an insignificant subsidiary of SAS Scandinavian, has bought a fleet of Boeing 787 Dreamliners and is opening nonstop routes between the United States and Europe at a dizzying pace. They sell seats cheap, then hope to get your price up by charging for extras like checked bags and seat selection. A second Iceland-based carrier, called Wow Air, promises inexpensive flights to Europe if you make a connection in Reykjavik.
Gulf carriers keep growing. The expansion of the Gulf carriers — Emirates of Dubai, Etihad of Abu Dhabi and Qatar Airways — has warped some traditional flying patterns. "Many travelers who once [connected in] Europe to reach the Middle East or Africa now fly through the hubs of the Gulf carriers," explains Chris Vukelich, a travel industry veteran who has tracked flight patterns both as an airline and a travel agency executive. "That creates empty seats to Europe that must be sold at a discount."
Chinese carriers keep growing. This is the year Chinese carriers broke through in the U.S. market. With the notable exception of United Airlines, which has launched flights to "inland China" cities beyond Shanghai and Beijing, U.S. carriers have mostly ignored the huge China market. So a flood of Chinese airlines are launching service to the United States and that new capacity creates deep discounts for flights throughout Greater China.
Airlines sell more tactically. It wasn't too long ago that airlines launched sales that lasted for weeks, sometimes months. No more, says Jack Foley, director of global sales and guest services for Aer Lingus of Ireland. "Now airlines offer much shorter sales with much deeper discounts. That allows us to sell 'excess' capacity quickly without filling up the seats we can sell later at higher prices." And if airlines guess wrong and there are still too many seats chasing too few buyers? They unleash another flash sale and promote it through social media.
Travelers buy more tactically. The chart accompanying this story took just a few minutes to compile. Why? Tools like the ITA Software matrix allow me (and you) to rapidly search prices on a route for weeks at a time and it highlights the lowest-priced travel days. Other sites send text or email alerts when fares drop on routes you've asked the search engine to track.
But no travel silver lining comes without the requisite nasty cloud. Even though they are throwing off record profits, U.S. carriers especially are under pressure from shareholders and security analysts. The complaint? Travelers aren't paying enough and revenue is falling despite the record profits.
"Everyone has a revenue problem," says Vukelich. "Eventually, the wheel turns and fares will rise again. It's inevitable."This column is Copyright © 2016 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2016 by Joe Brancatelli. All rights reserved.