Since the Brexit, the pound has been in free-fall and could soon reach an all-time low against the dollar. I want to purchase tickets to the UK from the west coast in March, specifically from Phoenix. Right now, flights seem to be very low, around $750 round trip/person in economy on a direct flight with BA. My question is simple: who has the magic ball to see how low prices will go, and when will be the perfect time to buy?
Let me start by saying that a few days ago Tiffany wrote a fantastic post entitled “UK Votes To Leave EU: How It Impacts Travelers,” which addresses the long term implications that Brexit could have on the airline & travel industries.
My goal with this post isn’t to say “yay let’s travel to the UK for cheap,” but rather to briefly address the impact that currency fluctuations can have on airfare.
To state the obvious, we have absolutely no clue what’s going to happen with the recent Brexit vote. We don’t know if they’ll actually follow through, we don’t know the long term impact it’ll have on the global economy, and we don’t know the impact it’ll have on airlines. There are a lot of questions with very few answers.
What we do know is that in the past week we’ve seen the value of the GBP drop from 1.50USD to 1.31USD.
That of course lowers the cost of purchases for foreigners in the UK (and sucks for those in the UK traveling abroad).
But to address csam27‘s question, does the falling value of the GBP impact the cost of airfare originating in the US, which is priced in USD? In other words, will the cost of airline tickets to the UK decrease even further?
The short answer is no. Airlines take a lot of risks with currencies, as they’re always trying to adapt to local markets. Airlines intentionally price airfare in local currencies, not directly tying it to their home currency. That’s because they have to compete with foreign airlines, and not just in their home market. Sometimes they’ll win with currency, sometimes they’ll lose, and sometimes they’ll all balance one another out.
All of this is to say that just because the value of the GBP is falling at the moment, doesn’t mean the cost of airfare priced in other currencies for travel to the UK will fall as well. Similarly, the price of airfare originating in the UK priced in GBP should remain roughly the same, rather than going up.
In theory decreased demand for travel to/from the UK has a higher chance of impacting pricing, though I’m not sure we’ll see that. If the GBP remains fairly weak, in the short term demand for travel to the UK may actually increase, rather than decrease.
The current Brexit situation is complex and uncertain, so I wouldn’t try to overanalyze it to get the best price on airfare. I don’t expect we’ll see any major changes in the prices of airfare to the UK, and I don’t think we’ll see any major changes in the price of airfare from the UK (at least priced in GBP, which would represent a change for those indirectly paying in different currencies).
$750 sounds like a great price for roundtrip travel from the west coast to the UK. If you’re comfortable with that price, I’d go for it. There’s always a chance the airfare goes down a bit, but I don’t see it going much lower than that. Similarly, there’s also a chance airfare goes up, which you presumably want to shield against.
So my advice remains the same as always — book a fare you’re comfortable with, don’t overanalyze it, and enjoy not stressing over a fare possibly going up or down a few dollars.