Europe Just Got More Expensive

Ron Miller wanted to take his wife and two kids to Barcelona in August. But after four months of searching the Web, talking to travel agents and calling airlines, the best deal he could find was $3,400 for a round-trip flight for the whole family.

"I had it all set up. I knew where we were going. And I know if I'm persistent I usually find a good fare," says Miller, a self-employed technical writer from Amherst, Mass., and frequent European traveler. "It's a lot more challenging to find a decent fare this year."

Miller's persistence paid off -- he found a $2,000 round-trip fare for the whole family. But it came with a catch. The Millers are flying on VG Airlines, a relatively unknown Belgian carrier, which began flying out of Boston's Logan Airport on May 30.

"My wife and I were surprised how hard it was," he says. "Given the situation, we thought people might be afraid to fly. But there weren't that many breaks or promotions."

Abroad Increase in Ticket Prices

Nine months after the Sept. 11 terrorist attacks, the European travel market is returning to normal. Airfare prices have firmed since the winter, when airlines significantly reduced prices to encourage travel.

According to the Air Transport Association, an industry trade group, the average ticket price for a 4,000-mile international flight was $385.92 in April, a $10 increase from the beginning of the year. Sales are holding firm, with international ticket sales off just 1% in April year-over-year, according to the Airlines Reporting Corp., an industry tracker.

"I hear the prices are getting outrageous," says Christopher Elliott, editor of the consumer travel Web site Elliott.org. "Europeans are all on vacation and the herd goes over to Europe in the summer. The airlines know this and they have passengers right where they want them. If you go to Europe in the summer, you'll pay more."

As a result, some travelers to Europe pay almost double what they did in early spring for airfare. A roundtrip flight on Iberia leaving Chicago for Rome on March 16 and returning on March 23 cost $688.15, according to Expedia.com, an online travel agency. These days, the cheapest flight listed on Expedia between those two points leaving on July 13 and returning on July 20 was $1,229.47, offered by Northwest.

You Missed It! Three months ago, a European vacation was a lot cheaper. Some flights cost almost twice as much in July then they did in March.
Travel Route	Price from March 16-23*	Price from July 13-20**	% Change
New York to London	$387.65, Virgin	$731.27, American	+88.6%
New York to Barcelona	585.23, KLM	869.64, British Airways	+48.6
New York to Rome	680.42, Northwest	1,157.47, Northwest	+70.1
Los Angeles to London	647.93, Delta	931.27, American	+43.7
Los Angeles to Barcelona	991.42, Iberia	1,346.75, American	+35.8
Los Angeles to Rome	801.42, Northwest	1,157.47, Northwest	+44.4
Chicago to London	688.15, United	872.77, American	+26.8
Chicago to Barcelona	708.92, Iberia	1,022.14, British Airways	+44.2
Chicago to Rome	638.65, Iberia	1,229.47, Northwest	+92.5
San Francisco to London	570.13, American	991.77, American	+74.0
San Francisco to Barcelona	856.92, Iberia	1,155.14, British Airways	+34.8
San Francisco to Rome	752.92, Northwest	1,313.97, Northwest	+74.5
* -- Round-trip fares booked on Thursday, Feb. 21. ** -- Round-trip fares booked on Monday, June 10. Source: Expedia.com

A Purchasing Power Brownout

Another factor will make European vacations more expensive this summer -- the weakening value of the dollar. On Monday, one euro was worth 94.3 cents in American currency, a level unseen in 18 months.

"Last year, the euro was trading at around 85 cents, so we're nine cents above those levels," says Marc Chandler, chief currency strategist at HSBC USA and a contributor to TheStreet.com's sister site RealMoneyPro.com. "It's a little more expensive for Americans to go to Europe."

While 9 cents may not seem like a big deal, the buck had a lot more bang last year.

Consider the following. The U.S. list price of the Lord of the Rings DVD is $29.99, while in Europe the same item costs 29.99 euros, according to Amazon.com. Based on the current exchange rate, the European DVD would be $1.70 cheaper than the American one. One year ago, that same DVD would have cost almost $4.50 less.

Because prices vary, big-ticket items can end up costing even more in Europe. The Sony DCRPC101 digital camcorder has a list price of $1,399.99 in the U.S., but it lists for 1,695 euros in Germany, according to Amazon.com. Using current exchange rates, the camcorder bought in Europe would cost $1,598.39 -- almost $200 more than in America.

These prices don't factor in the charges levied when exchanging currency. To make sure you get the best exchange rate, Chandler recommends using credit cards to make purchases.

The High Life For Low Money

While budget travelers will pay more this summer, those with first-class tastes can get a lot more for a lot less. Because many Europeans take long vacations in July and August, business travel tends to dry up, says Matthew Bennett, analyst with consumer information site FirstClassFlyer.com. As a result, airlines are stuck with business-class inventory.

"Airlines are doing a lot of discounting of the premium cabin seats, since leisure travelers won't pay the full fare for first class," he says.

British Airways (BAB Quote) currently offers a deal where passengers can upgrade from economy class to World Traveler Plus service, which features an extra 7 inches of legroom, a personal seat-back TV screen and a three-course gourmet meal, for $400 round trip.

"Originally, a [World Traveler Plus] flight from Los Angeles to London would cost you $2,000," Bennett says. "You can get that for as cheap as $1,200 now."

For those with a bit more money, the deals -- and the perks -- are even more extravagant. Under Virgin Atlantic's Upper Class service, travelers are chauffeured to and from the airport, receive in-flight massages and sip free drinks at a special bar. Only now, travelers won't have to pay $7,000 roundtrip to fly from the East Coast and $9,000 from the West Coast to receive posh treatment.

"East Coast fares are on sale for $2,991, while West Coast fares are $3,991," Bennett says. "Those are good through Sept. 15."

Even the Concorde is on sale. A round-trip flight to Europe has been reduced from $12,000 to a comparatively cheap $6,999. While these prices aren't for the faint of heart or the light of wallet, Bennett says, the rates "are in reach for someone with a business class budget."

The bottom line: Economy-class travelers like Ron Miller will probably struggle to find cheap flights as the travel industry continues to improve, but those looking to fly first class can do so at greatly reduced prices.