When the vote came in and Brexit prevailed, the impact on financial markets was quick. But no industry felt the sting quite like the travel sector. In one 24-hour period, the stock price of British Airways dropped a staggering 30 percent. Other travel-related stocks, such as hotels, tour operators, and other airlines also plummeted. Then came the bombings at the Istanbul Airport.
Since it’s the summer high season, a time of the year where few discounts ever appear, discounting was everywhere—and on a global scale. This reflected fears for many countries where the currency was affected by Brexit. The British pound (which dropped as low as $1.32) as well as the U.S. Dollar affected currencies around the world. The South African Rand, already severely depressed against the U.S. Dollar, fell 4.4 percent to more than 15 Rand to the Dollar. The Hungarian Forint dropped 3.5 percent, the Polish Zloty dropped 4.4 percent, and the Mexican Peso dropped 3.6 percent.
In Australia, a round trip ticket on Virgin Australia from Sydney to New York weighed in at just AUD 999 (that’s about USD $745 — an outrageously low price). Within hours of the Brexit vote, Qantas was offering triple mileage to anyone who booked a flight to London. This gives you an idea of how huge the passenger drop has been.
Because of currency fears—and the mere affordability of travel, given the increasing strength of the U.S. Dollar—more and more Europeans are NOT coming to the U.S. this summer. What this means is a lot of empty seats on what would have been their flights home. On flights to London, fares are dropping because of the excess capacity. Because of the strength of the U.S. Dollar versus the British Pound, this also means that once you land, you’re essentially getting a 30-40 percent discount on local goods and services. This includes meals, attractions, and ground transportation, because local governments can’t increase the prices on what the locals are paying.
For example, a train from Heathrow to London, a hotel, and a modest lunch would have run about £217 eight years ago. That would have translated to about $434. Today, it averages $293, and it’s dropping. Translation: big bargains on airfares to almost anywhere in Europe. This is not just the UK, but anywhere British travelers had hoped to travel but are now not.
That means most of Western Europe is on sale during what normally would be considered high season. Want to know how much Europe is on sale? Consider this: Portuguese airline TAP just announced it’s now even cheaper to get anywhere in Europe. Not only is the airline offering very cheap round trip fares from New York and Boston ($799, and that includes all taxes), but once you land in Lisbon the airline gives you a three-night stopover for free. Then you can fly to Berlin, Rome, Amsterdam, and 42 others cities—at no extra cost. Other airlines offering similar inexpensive deals are Norwegian Air Shuttle, Icelandair, and Turkish Airlines.
It’s not just coach airfares. Business travel from the UK and other parts of Europe to the U.S. is also off as a result of the Brexit vote. Translation: Business class tickets are now being discounted by a number of airlines on that lucrative “NYLON” (New York to London) route.
I am starting to see some discounting on European cruise itineraries as well. A number of cruise lines canceled very popular Istanbul port calls after multiple terrorist incidents a few months ago, and the bombing at Atatürk Airport prompted the rest of the lines to cancel their Turkey itineraries as well. This, coupled with the drop in the British Pound, is resulting in more passenger cancellations of European/Mediterranean cruises—and some lines are starting to discount those suddenly empty cabins.
But it’s also not just about Americans going abroad, it’s about the cost of goods and services that are travel-related here at home. With fewer Europeans coming here, American cities are about to become less expensive for us as well.
There’s one more fallout from all of this: frequent flyer award miles. Once impossible to redeem during the summer months to Europe, a number of routes are slowly opening up for redemption, and not always at the highest mileage levels. Savvy travelers can suddenly take advantage of mileage redemption on flights they actually want during what would normally be considered an impossible time of the year to cash in miles.
For more travel news and information about how you save on international travel, check out:
- Travel Safety After the Attacks at the Istanbul Airport
- Travel Deals Around the World: Peter Greenberg’s Hot Destinations for 2016
- The Benefits of Traveling During an Election Year
By Peter Greenberg for PeterGreenberg.com