Flying visit - 2 June 2008

Posted by Paul Collins No comments

Watch the overheads

There is no doubt that low-cost airlines have had a massive influence on both the travel and the overseas property markets. They fundamentally changed how we take our holidays, opening up the long weekend break in new destinations, all but killing off the traditional package holiday, and allowing tourists to become independent travelers instead of the sheep-like drones they once were. They have also made the overseas property market open to many more people and more destinations than would have been the case otherwise.

Although it isn’t a question that comes up regularly, there is a tacit admission among many people in the overseas property business that they wouldn’t be anything like as well-off and successful in finding new and emerging markets if it wasn’t for the no-frills carriers. Not only do they get people out to destinations that they might otherwise find difficult or time-consuming to reach, they have made travelers braver in their choices of destination as the outlay to get there is no longer prohibitive. For example, how successful would the property market in Prague be with foreigners now if it wasn’t for the fact that so many stag parties and couples on a romantic weekend away could get there for under £10 each way? How many people would have seen fit to commit their savings to their cottage in the south-west of France if there weren’t two low-cost airlines competing to keep fares low?

Many websites and magazines have warned against this as a significant factor in the buying process for years now, as the way these airlines are run means they have to pull unprofitable routes at short notice in order to survive. The prospect of having to drive to their property, or mix it with the Proletariat on the local rail system is enough to send some buyers into palpitations – and they are the lucky ones. Imagine trying to get to Bansko if the airlines no longer saw a profit in flying there…

While in some cases, the volume of activity in the property market has been enough to ensure that this will not happen in the near future, recent events have brought the precarious nature of the airline business into sharp perspective.

Last week saw the closure of the business class-only carrier Silverjet, which flew from London to New York and Dubai – the third and last airline of this kind to close this year. Although Silverjet, and its erstwhile competitors Eos and Maxjet, operate at the opposite end of the marketplace to the no-frills carriers, they are all hobbled with the weight of the rising cost of fuel. British Airways announced on Friday that it was raising the fuel duty costs it charges passengers in response to the extra costs it has had to take on, and fuel prices have been blamed for the collapse of Silverjet.

Acknowledgement of the fact that oil is a finite resource will be hard for the world that we have created, but we will have to get used to the fact that traveling by air is going to continue to get more expensive in the immediate future as well as in the longer term. An acquaintance of mine insists that the rises are set to continue for the rest of this year, until the price reaches $170 per barrel of crude oil. At this price, it apparently becomes economically viable to extract the reserves of crude that currently reside under Alaska.

With this in mind, it might be time to factor in the extra cost that getting to your property overseas might amount to – or to look a little closer to home when buying your property, so the train becomes a realistic option.

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