Brexit could bring cheaper flights for travelers to Europe

The International Air Transport Association, representing 260 of the world´s airlines, has estimated the number of UK air passengers will be three to five percent lower by 2020, driven by an expected downturn in economic activity and fall in the sterling exchange rate, the company said.

Following Britain´s vote to leave the European Union, airline stocks plunged on an anticipated drop in travel demand. The drop in the British pound and the Euro could make it less expensive to passengers traveling to Europe.

American Airlines could be among the US airlines hit hardest by Brexit. Its stock dropped more than 10 percent on June 24 to close at USD27.05. Airline analyst Daniel McKenzie said American has the “largest exposure to the United Kingdom,” with 6.2 percent of round-trip flights “touching the UK.”

American has 25 daily departures to London, along with flights to Birmingham, Manchester, Edinburgh, and Glasgow. By contrast, United Airlines has 5.3 percent of its flight capacity going to the UK, and Delta Air Lines has 2.7 percent of its business to the UK, McKenzie said.

While travel will become more expensive for British citizens, industry experts said 2016 will be a good time for Americans to travel overseas. The pound lost 8.3 percent of its value against the dollar following the British Brexit vote, reaching its lowest point since 1985.

Investment firm Seeking Alpha said a plunging pound will reduce demand for travel from the UK to the United States, and could also potentially disrupt British Airways flights in London used by American Airlines passengers to travel to other destinations in Europe, Africa, the Middle East, and India.