Cost of overseas travel expected to soar

Patterson says with less competition, remaining airlines will be able to raise their prices.

Higher jet fuel prices will put further pressure airlines to raise prices, he says.

‘‘Savvy travellers may still be able to snare bargains on longhaul travel, but these may come with the need to first hop across the Tasman and then transfer onto their long-haul flight.’’

He says the Australian market is likely to be better served from a long-haul perspective given its government clearly signalled to airlines its border reopening intentions and stuck to its commitments, he says.

Travellers will face other new expenses when it comes to travelling overseas.

There will be additional direct expenses such as the need to get Covid-19 tests, while other costs may be more indirect, for example having to take an additional week off work and pay for a hotel to isolate should a traveller contract Covid-19 while abroad.

‘‘On the flipside, there will be some cost savings while away, with many hotels and restaurants in holiday destinations likely to offer really great deals to lift their occupancy after more than two years of limping through.’’

Capa – Centre for Aviation chairman emeritus Peter Harbison says in the short term, 2022 at least, the main constraint on international travel is going to be border control inconsistencies, and the fear of them, that make people reluctant to travel.

‘‘Lots of people have been burnt, and it changes behaviour for quite a long period,’’ Harbison says.

‘‘In terms of pricing, there are conflicting ingredients.’’

Airlines need to get cash flowing again, so have to tempt travellers with low prices, he says.

But most airlines also have large debts and need to be spending more on things like new aircraft and sustainable aviation fuel in order to reduce their carbon footprints.

He thinks trans-Tasman fares are going to be cheap for some time, but long haul will be more complex.

‘‘Most of the flag carriers rely heavily on business travel to subsidise the back of the bus.’’

Business travel, not just premium travel, is going to be significantly down for several years, he says.

‘‘That will mean long haul will be different, probably fundamentally changed for years to come.’’

There will probably be fewer services, and they will possibly be more expensive, he says.

‘‘Although this becomes a real battle between supply and demand. If prices are too high, people won’t fly. If prices are too low, airlines will lose money.’’

This makes the long-haul lowcost carrier model more viable as they don’t rely on business travellers to the same extent, he says.

New narrow body long haul aircraft will be increasingly influential, he says.

Because of Covid-19, people will be wanting non-stop flights to their destinations, something Air New Zealand caters to, which could see prices on those services rise, he says.

Travel Agents’ Association president Brent Thomas says there is pent-up demand to travel overseas.

‘‘We’re waiting on clarity from the Government on a meaningful opening of the borders and giving confidence back to the New Zealand consumer to book for those trips,’’ Thomas says.

He says costs in general are increasing across a range of sectors, and the travel industry is no exception.

‘‘It’s fair to say the cost for travel will be up.’’

The rising cost of aviation fuel will make overseas travel more expensive as will Covid-19 testing requirements.

‘‘That certainly adds cost but also adds complexity. Where do you get it? What’s acceptable? What do you need to do if you’re in transit?

‘‘Certainly the complexity of travel has increased.’’

There is a big question mark about how long countries will require testing and how useful it is considering how widespread the Omicron variant is, he says.

He says travel insurance costs have also increased ‘‘to a degree’’, in part because of the Government’s ‘‘do not travel overseas’’ warning on its Safe Travel website, he says.

The Government needs to better understand the importance of increasing airline capacity in order to create a competitive environment for airfare and cargo rates, he says.

‘‘If you’ve got a duopoly there’s really no incentive to drive prices to the nth degree.

‘‘There is no doubt about it, and we have seen this over the past 20 years, as competition has come on the consumer is the winner.’’

In 2022 there will be a limited number of routes people will be able to fly, but that may start to increase towards the end of the year if demand is there and carriers return to New Zealand, he says.

‘‘There’s no point flying planes that are 70 to 80 per cent empty. They have to be 70 to 80 per cent full to make them worthwhile.’’

There will be a ‘‘significant bounce’’ in travel when restrictions are lifted, but it will be some time before it returns to pre-pandemic levels, he says.

‘‘2019 is probably a couple of years away.’’

Flight Centre New Zealand product general manager Victoria Courtney says PCR predeparture tests, required for international travel, can cost anywhere between $140 to $250 per person, depending on the provider.

Cook Islands is currently the only overseas destination New Zealanders can travel to without having to quarantine on arrival and return, but it does require a PCR test.

Courtney says there are some sharp deals on offer there, including $1145 per person for return flights and five nights at a three-star resort.

Air New Zealand is offering economy fares with checked in baggage, departing in late February, for $874 return.

University of Otago head of tourism Professor Neil Carr says costs are a function of supply and demand, which are also related to one another.

‘‘The bigger the demand for overseas travel, the more airlines will seek to compete to meet that demand and in the process drive down prices.’’

However, if demand is low then prices will be higher, he says.

Airlines also operate on the basis of knowing their routes are viable in both directions.

A lot hinged on New Zealand’s border being open for all, he says.

‘‘If we require visitors or returning Kiwis to go into MIQ, or even self-isolate we will inhibit demand which then pushes up cost of flying.’’

Demand is expected to gradually increase in line with the border opening slowly in stages, he says.

‘‘Every time we remove a barrier to travel and the more certain we become that the situation will not quickly change, the more demand will increase.’’

Another related cost, though not necessarily a financial one, is a requirement to self-isolate on return to New Zealand, he says.

‘‘Certainly the complexity of travel has increased.’’ Brent Thomas Travel Agents’ Association president