00:00Airline stocks surging today after the U.S. and Iran said that the Strait of Hormuz is open as long
00:06as the ceasefire holds for commercial vessels.
00:08For more on what this means for travel, Brian Kelly, founder of The Points Guy, joins us now and he's
00:12also the author of the book How to Win at Travel.
00:15Brian, great to see you this morning. And look, airlines have been coping with this in real time.
00:19Some have raised prices. In the case of Europe, they've been canceling routes.
00:23If the price of jet fuel comes down, if the Strait does remain open, how quickly can airlines again adjust
00:30to this?
00:31Yeah, well, the airlines needed good news because it's been pretty terrible news lately.
00:36This is certainly a good signal, but we are not out of the woods yet.
00:39And in fact, airlines have already raised fares almost across the board, especially internationally, especially in business class.
00:45And we've even seen a lot of cancellations. And while a lot of them are short haul flights within Europe,
00:51yesterday, Lufthansa abruptly closed their regional subsidiary almost overnight.
00:57But we are seeing L.A. to Paris, Air France. My friends just had a flight canceled for later this
01:02summer.
01:03So, number one, for anyone flying to Europe anytime soon, crack your reservations in an app like Flighty
01:08because they are changing. They're changing aircraft types. Your seats might get reassigned.
01:13So it's going to be bumpy. But certainly this is good news.
01:15I don't expect prices to lower anytime soon on this, but we could avert the impending jet fuel shortage crisis,
01:24which is looming, especially for Europe and Asia.
01:27So maybe we avoid that. But, Brian, what does it take to get prices back down?
01:32If you're someone who's waiting to buy a flight, how long do you need to wait in order to get
01:37prices
01:37to feel a little bit of gravity?
01:40Yeah, I think we would need weeks of oil shipments flowing through the strait with ease, which we've not seen
01:47yet,
01:48although today's announcement is sort of good news. But also, you know, it's by no means back to normal.
01:55I think we would need several weeks of that to really see potentially airfare come down.
02:01But I just don't see that happening. So my tip to anyone looking to book summer travel, do it now.
02:06Even private jets book it now, lock in a price, although they could always add in fees later.
02:13Cruises are starting to do that as well. So in general, I feel like the pricing now is as good
02:17as we're going to get for the time being.
02:20Even so, Delta, for example, when they had earnings just about 10 days ago, said that bookings were generally strong,
02:28especially across premium and corporate travel. We know that they increased the baggage fees
02:33to help offset some of the rising costs. Is there a degree, Brian, where even if prices of oil and
02:39jet fuel start to come in,
02:41that it's a consumer that at least for the higher end traveler is willing to spend enough
02:46that maybe airlines keep some of the elevated prices that they have and keep some of the additional fees?
02:51Oh, absolutely. It's a trend. Just this week, United launched basic fares in their Polaris business class international.
02:58So now if you book the cheapest United business class, you don't get access to their beautiful lounge.
03:03You don't earn any miles unless you have a lead status or a co-brand card.
03:07So the airlines are in full mode of how do we not only raise prices, but for those who are
03:12price sensitive,
03:13how do we strip away as well?
03:15So unfortunately for frequent travelers, it's a it's not a great time as we see, you know,
03:21everything we used to get for free is now we have to pay for and fares are going up.
03:25But, you know, I still use a ton of frequent flyer miles for travel this summer.
03:29Air France has 60,000 mile business class awards. So if you've got points, use them.
03:34If you've got Amex points, there's a tool called PointMe that will actually search and give you tips.
03:40Another one is seats.aero.
03:41So, you know, don't just assume prices are really high the whole summer.
03:45There are still still deals out there. You just need to know how to hunt for them.
03:49Ryan, is that what what's keeping this whole thing afloat and keeping people continuing to fly?
03:54Because I don't understand with all of these annoyances with the difficulty into getting a lounge,
03:59the need to get a card, making it harder to get miles.
04:02Why hasn't there been more of a pushback from the everyday consumer?
04:07Well, people love travel. And even, you know, millennials, Gen Z, they are the experienced generations.
04:13The urge to travel, that is the new luxury. It's not going away anytime soon. The airlines know it.
04:18And yeah, I mean, we've seen in the U.S. this past, you know, nine months, government shutdowns, long lines.
04:24And that has not slowed down travel.
04:26Right now we're seeing in Europe, for anyone traveling to Europe this summer, the new EES system.
04:30We're seeing two to four hour lines because you now need to go to a kiosk, get your picture taken,
04:35get your fingerprints done.
04:37But we we see all of this disruption not really impacting demand, which means bottom line, people still want to
04:44travel.
04:44And if you look at hotel rates, especially luxury hotel rates in Europe this summer, you know, four thousand dollars
04:49for normal rooms.
04:51Four thousand is like the new one thousand. It's it's pretty wild that the demand is still so high.
04:56Man, you add a World Cup to that this year. And I am just terrified for all the prices.
05:01Brian, we're almost out of time. So I do just want to, while we have you, get your reaction to
05:05the news early this week
05:07that United Scott Kirby had floated the idea to this administration on a tie up with American Airlines.
05:15What was your take on that?
05:17I mean, shock. I think this is really a PR play to get people talking about it.
05:22I also think it's a troll. You know, this is American Airlines 100th anniversary week.
05:26And all we're talking about is United potentially taking them over with, you know, Scott Kirby used to work
05:31as the president of American. So it's kind of a rib.
05:35And I do think it's setting expectations that this would never, I don't think, happen.
05:39The combined carrier would be twice the size of Delta, would not be good for consumers.
05:44We're living in an economy right now where voters, especially in a midterm year, are very conscious of increase in
05:50prices.
05:50We all know what a monopoly would do to airfare.
05:52So I think that was more of just ribbing his old employer and also setting the tone so that
06:00they can eventually take over a carrier like JetBlue, which is much more likely.
06:03I was going to say, Brian, does this not just bring into the conversation that maybe not
06:07a united American tie up, but a different tie up of sorts?
06:11Yeah. Secretary Duffy has already said this administration is willing to approve.
06:15You know, the Biden administration, I think it was a bad idea.
06:18They did not allow carriers like JetBlue and Spirit to merge.
06:22That would have been good for consumers because now Spirit's on the brink of liquidation potentially this week.
06:28And when carriers go bust, that's not good for anyone.
06:30So allowing smaller carriers to band together would have been good for consumers, in my opinion.
06:37So we'll see what happens.
06:38But I definitely sense some more consolidation while President Trump is in office.
06:42Thank you so much.
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