Concern raised over pound exchange rate

The fall in the pound has sparked fresh concern about the depth of the economic problems facing the trade.

The pound was valued at $1.55 yesterday after being close to $2 for two years. Sterling also fell against the Gulf State currencies and remained low against the euro.

Sterling’s decline will make many popular destinations more expensive, slash savings on fares that would otherwise come from the falling oil price and complicate holiday pricing for tour operators.

Federation of Tour Operators director-general Andy Cooper said: “The plummeting of the pound has to be a concern.”

Sunvil Holidays managing director Noel Josephides warned: “We should expect the dollar to strengthen. If you are quoting for a tailor-made holiday to the US next August you probably have to quote at $1.40 to £1. But the price could be the difference between getting the booking or not.”

He warned long-haul fares would remain high. “For Dubai it is a double whammy – higher fares and a falling pound. My guess is people will holiday closer to home,” he said.

An Advantage spokesman agreed, saying: “People will look at how much they spend on a trip and whether to trade down so they have more money in resort.”

A spokeswoman for ABTA said: “I do not see how Christmas shopping in New York is going to be big this year.”

But she added: “Tour operators and airlines are being cautious and our members are not slashing prices. Australia, South Africa, Brazil, New Zealand and Turkey all look more attractive [on price]. It is not all doom and gloom.”

Cooper agreed, describing capacity as “sensible” and said: “We are in better shape than we might have been.”

The continuing turmoil is likely to produce fresh cuts by airlines, with Airports Council International reporting a 4% fall in worldwide passenger traffic in September year on year. Dubai saw a 5% drop and Bangkok a 20% fall.

British Airways chief financial officer Keith Williams warned: “All airlines are reviewing all parts of their business.” BA’s share value has fallen by more than two-thirds in recent weeks.

Travel and the economic crisis

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