Transatlantic travel soars as Americans make most of strong dollar

Transatlantic travel is booming, driving airline revenue as Americans armed with a strong US dollar fly to Europe and the UK.

Revenue at United Airlines from trips between the US and Europe rose 40 per cent in the third quarter compared with the same period in 2019, to $2.5bn. The average fare on those trips climbed 30 per cent compared with a year earlier.

The strong dollar has been “useful” in prompting US travellers to book trips to Europe, said United’s chief commercial officer Andrew Nocella. What was an “incredible” summer season has maintained momentum into the autumn. The airline debuted multiple new routes last summer, flying 14 per cent more seats across the Atlantic than it did in 2019, and it plans to add more routes next year.

“It’s full speed ahead across the Atlantic,” Nocella said.

Line chart of Variance between 2019 and 2022 bookings showing US bookings to Europe recover faster

All three big US carriers reported an increase in transatlantic revenue compared with 2019, and many European airlines also have benefited from an uptick in demand. Executives and analysts attribute the increase to the rising value of the dollar against the pound and euro. The pound now trades at $1.12, while the euro is at $1.02.

The dollar’s influence appears in the direction of travel. Data from Dohop, a flight connections bookings platform used by more than 60 airlines including Spirit, Avianca and Air France, showed that passenger traffic from North America to Europe increased faster throughout the year than the reverse.

Outbound passenger traffic between May and August from North America was 2.8 times higher than between January and April. But Europe to North America passenger traffic during the summer was just less than double the level between January and April.

Bookings from the US to Europe are closer to pre-coronavirus pandemic levels. Olivier Ponti, vice-president of insights at travel industry data company ForwardKeys, said that as of mid-October, flight bookings from the US to Europe lagged 2019 levels by 6 per cent, while bookings from Europe to the US remained 19 per cent lower.

Flights operated from Europe to the US

Norwegian start-up Norse Atlantic, which flew the first of its services between London and New York in August, said it had experienced “especially strong” demand from the US to London, a trend it put down to the weak pound. Virgin Atlantic boss Shai Weiss said that UK holidays were essentially “on sale” for American tourists.

“If I was someone in New York and wanted to buy a Hermes bag, I would come to London,” he said.

At American Airlines, transatlantic travel generated $1.9bn in revenue in the third quarter, rising 19 per cent compared with the same period three years earlier. A greater share of the airline’s flights are domestic than before the pandemic, said chief commercial officer Vasu Raja, but still “there is clearly demand . . . for the long-haul product”.

Delta’s international revenue increased 12 per cent in the third quarter, even with a smaller network, driven by leisure trips to Italy, Spain and Greece.

Flying capacity is increasing, too. Delta Air Lines has been slower than US rivals to restore seats and flights to its schedule after pandemic cutbacks. However, last week Delta president Glen Hauenstein said that Europe was the first region where its seating capacity on routes in October exceeded 2019 levels — including for US domestic travel.

Next summer United and Delta anticipate increasing the number of seats they offer on flights to Europe, according to aviation data company OAG. United, which historically operates more international flights, plans a 29 per cent expansion compared with 2019. Delta’s capacity is scheduled to rise by 5 per cent.

Would-be tourists have missed out on years of European travel, Hauenstein said, and the result is “robust demand” that Delta expects to last through next summer.

“People run out of time, myself included,” he said. “We think: ‘Gosh, how many years do I have left to do that?’ So I think we have a really good backdrop there.”

Washington DC resident Vince Ryan was one of the travellers itching to visit Europe this past summer. He paid $980 to fly to Istanbul — more than he was used to paying in his annual pre-pandemic trips — to shake off restlessness with weeks of sun and exploring ruins. It did not hurt that when he arrived $1 could buy 17 Turkish lira, while six months earlier it would have only been TL13.

But while airline executives expect transatlantic travel to remain robust, Ryan’s experience suggests there is a limit to wanderlust. He considered flying to Rome over the Christmas holidays before abandoning the plan in the face of pricey fares.

“I’m looking at economy-class flights for $1,300 to $1,700,” he said. “I’m not going over there on that.”

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