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Report: Europe Sees Stable Airfares and Improving Euro

July 6, 2012

Trans-Atlantic has released its report for July, noting that airfares to Europe are "remarkably stable" for the peak season and off-peak reductions are being offered for travel after Labor Day, earlier than usual. The rapid, recent decline of fuel prices eases pressure on fares, the report continues, and reduced competition has enabled the three dominant trans-Atlantic airline alliances to more closely calibrate capacity and pricing. The lowest New York–London fares have slipped to just below $1,000 for July and August. Upward moves have been less than 5 percent except for San Francisco–Frankfurt in August (the UnitedLufthansa joint alliance has no competition on the route).

Moreover, off-peak reductions are going into effect early, right after Labor Day, and low fares for both September and October are below those of a year ago.

Financial Concerns
The euro zone stepped back from the edge again. A new Greek government was elected, with the pro-bailout parties eking out a narrow plurality. The new prime minister, conservative Antonis Samaras, promised to retain the euro and seek some relief from austerity requirements. Then, last week, German Chancellor Angela Merkel agreed that bailout funds could be moved directly to troubled banks, instead of through member governments (which have been struggling to finance the added debt and austerity requirements). Meanwhile, Cyprus became the fifth of the 17 euro nations to ask for European Union support (its banks were swamped by investment losses in Greece, including sharply discounted bonds).

But the report also notes that Spain and Italy are still struggling each month to roll over debt (they are paying rates that are barely sustainable), reform labor markets and re-ignite growth.

Over two weeks, the dollar dropped from a 23-month high vs. the euro (€0.81, inter-bank rate), bounced up and down in reaction to euro-crisis news.

Britain After the Olympics
VisitBritain and British Airways will launch $7.7 million worth of post-Olympics promotions in the U.S. and other international markets immediately after the September 9 closing ceremony for the London Paralympics (the latter follow the Summer Games, which close August 12).

Marketing Director Laurence Bresh promised “to capitalize on the media coverage” to build momentum for the fall and beyond. Anniversary promotions aimed at the U.S. market will include the 50th anniversary of both James Bond movies (Dr. No was the first) and the “British Invasion” led by the Beatles and Rolling Stones.

The promotions may be necessary: Travel to Britain was up 6 percent overall for the year through April, but down 3 percent from the U.S., according to preliminary estimates issued by VisitBritain.

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