After voters in the U.K. voted last month to leave the European Union, there was wide speculation that airline travel might be one of the first sectors to suffer from the results of that blockbuster referendum. And now those shock waves are starting to show.
In announcing its quarterly earnings this week, Delta said it has decided to reduce capacity between the U.S. and the U.K. by six percentage points from its previously planned winter schedule. It didn’t specify which routes might take the brunt of the cutbacks or if they will be evenly spread, but it blamed the decision on “the additional foreign currency pressure from the steep drop in the British pound and the economic uncertainty from Brexit.” Meaning: It’s getting a lot more expensive for Brits to visit the U.S. and other countries, and fewer are expected to travel in coming months.
Delta said that will be a major factor in the airline reducing its overall system capacity by one point in the December quarter. There has been no word yet from other airlines in the U.S.-U.K. market about any changes in their schedules, but it is reasonable to expect similar capacity caution from Delta partner Virgin Atlantic, the American-British Airways joint venture, and United.
The U.K. newspaper The Independent said the plunge in the value of the pound relative to the dollar is discouraging U.K. travel to North America, and lingering fears among U.S. citizens of terrorist attacks are having a dampening effect on demand for eastbound travel, in spite of the greater buying power of the dollar in Britain.
In any case, those factors could already be contributing to lower fares for business travelers. A check on Google Flights this week found August fares that are about half off of “normal” – i.e., nonstop business class to London is going for as low as $3,500 roundtrip from the west coast and just $2,600 from New York.
In its own analysis of the Brexit impact, the International Air Travel Association predicted that the U.K. air passenger market is likely to be 3 to 5 percent lower by 2020 than it would have been if the vote had gone the other way.
How has Brexit affected your travel plans? Or has it affected them at all yet? Please leave your comments below.
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