Euro and European Airfares
Dec 3rd, 2003, 09:55 AM
#3
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While I think it is a little more complicated than "airfares are denominated in dollars", which ignores real prices increases for things purchased by the airlines while operating in Europe), multiple issues can affect airfares and to pinpoint one issue alone probably simplifies the pricing equation.
For example, the dollar may cause a decline in the number of Americans willing to travel to Europe, which could reduce demand. However, will that demand be offset by European's coming here to take advantage of their currencies strength?
For example, the dollar may cause a decline in the number of Americans willing to travel to Europe, which could reduce demand. However, will that demand be offset by European's coming here to take advantage of their currencies strength?
Dec 3rd, 2003, 10:04 AM
#4
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Hi Ryan,
Good point. However, don't the airlines pay for their needs in Europe in euro? Thus, if they have contracted with a European caterer for meals at a fixed price in Euro, the only reason that their costs would rise would be if they don't earn enough Euro. Since they charge their European customers in Euro, there should be little effect.
Good point. However, don't the airlines pay for their needs in Europe in euro? Thus, if they have contracted with a European caterer for meals at a fixed price in Euro, the only reason that their costs would rise would be if they don't earn enough Euro. Since they charge their European customers in Euro, there should be little effect.
Dec 3rd, 2003, 10:07 AM
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Two points here, I think:
1. The kind of budget fares that tourists look for bear little relation to cost. They have more to do with load factor, that is, filling the planes. If the airlines can fill more seats with tickets costing $2000, they will offer fewer $500 seats.
2. To the extent that costs are a factor, such things as fuel prices and US labour costs would have greater impact than exchange-related increases in landing fees in Europe or meals purchased in Europe or the salaries of European-hired ground staff.
1. The kind of budget fares that tourists look for bear little relation to cost. They have more to do with load factor, that is, filling the planes. If the airlines can fill more seats with tickets costing $2000, they will offer fewer $500 seats.
2. To the extent that costs are a factor, such things as fuel prices and US labour costs would have greater impact than exchange-related increases in landing fees in Europe or meals purchased in Europe or the salaries of European-hired ground staff.
Dec 3rd, 2003, 10:13 AM
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I too don't think it's quite as simple as ira suggests, especially for European airlines (with financial expectations defined in euros (or whatever (For you grammar freaks, can one nest parentheticals?))). Bottom line, though, is that European carriers will need to stay with their US competitors.
In any case, if you find a fare today that you think is competitive and within your budget, book it. I've already booked a flight to Paris for next September (I think it was ira who steered me to Flights.com).
In any case, if you find a fare today that you think is competitive and within your budget, book it. I've already booked a flight to Paris for next September (I think it was ira who steered me to Flights.com).
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