Financial markets crisis: Rising prices and reduced spending power warning to holidaymakers - but Scotland could enjoy tourist influx

Holidaymakers have been warned of a grim outlook from rising prices and reduced spending power abroad because of the weakened pound – but Scotland’s travel trade could benefit from an influx of tourists, helping to secure air routes.

Travel agents said travellers could also face fuel surcharges as airlines seek to offset soaring costs.

Consumer group Which? has already reported average air fares for the October school holiday south of the Border are 42 per cent higher than before the Covid pandemic.

The Scottish Passenger Agents’ Association, which represents travel agents, said the pound’s fall against the US dollar had also affected other countries, such as World Cup hosts Qatar.

Delta will resume Edinburgh-Atlanta flights in May after a gap of 14 years. Picture: Delta Air Lines

It recommended passengers booked all-inclusive holidays to guard against further cost increases.

President Mike Tibbert told The Scotsman: “The fall in the value of the pound means that holidaymakers’ money won’t go as far when they are spending in their destination.

"But the plunging currency is not the only issue facing the travel industry as it comes on the back of holiday price increases due to fuel prices.

"There is also the possibility of future surcharges on top of these price increases, as fuel is traded in dollars.

Scottish Passenger Agents Association president Mike Tibbert said the weaker pound meant holidaymakers’ spending power abroad had been cut. Picture: SPAA

“Scots may have less confidence in booking an overseas holiday, and travellers to the USA will be particularly affected.

"It’s important to remember that there are also other countries popular with Scots which have their currency pinned to the dollar, such as Barbados and Qatar, where the World Cup is to be held in November.

“Winners in this situation may be both all-inclusive holidays and cruises.

"Knowing your food and drink costs have been pre-paid may give increased appeal to these types of holidays.”

Glasgow and Aberdeen airports said travellers were cutting back on city breaks, but sunshine holidays remained sacrosanct for many.

A spokesperson for owner AGS Airports said: “The increases in the cost of living will certainly be a consideration when it comes to holiday choices.

"However, we’re still seeing strong demand for leisure breaks, with people keen to get away on holiday.

"There has been some indication that demand for weekend city breaks is not as strong and people may be opting to reduce the number of shorter breaks in favour of a longer holiday.

“The weak pound could provide a boost and make Scotland a more attractive destination for some overseas visitors.”

While Glasgow Airport has lost all but one its US routes – to Orlando, dominated by Scots heading to Florida’s theme parks – it still boasts a daily flights with Dubai, a key hub for long-haul travellers.

Edinburgh is better positioned to benefit from any flood of American visitors.

Scotland’s busiest airport will have five US links, in addition to Orlando, when Delta resumes its flights to Atlanta – one of the world’s biggest hubs – in May after a gap of 14 years.

The record six routes are completed by New York, Boston, Chicago and Washington DC.

Tibbert said foreign visitors attracted by the weak pound, especially from North America, could benefit Scots by helping to secure the future of new air routes.

He said: “Inbound tourism will be another beneficiary [of the weak pound].

"It will be more attractive for overseas visitors to come to Scotland as they will get a boost to their holiday currency.

"The position of the dollar will make Scotland a particularly alluring prospect for North Americans.

“One positive from this is that an influx of inbound long-haul and transatlantic visitors will have a positive effect on outbound travel in the future, as increased passenger numbers on some of the new routes which Scotland has secured will help to safeguard these routes for when the pound’s position improves.”

Aviation analyst John Strickland said flight fuel charges were “highly unlikely”.

Strickland, of JLS Consulting, said: “UK airlines, in particular, face a toxic cocktail of challenges for the winter.

"Fuel prices were already high and consumer demand under pressure due to higher inflation.

"Now the plunge of the pound adds significant cost pressures, given that fuel and aircraft lease costs are dollar denominated.

"It places further pressure on demand for travel to Europe or the US, with travellers’ buying power squeezed.

“I think surcharges on flights are highly unlikely – maybe a small possibility on holidays, but competitive pressures would mitigate against it.”

A VisitScotland spokesperson said: “While it is too early to predict the full visitor picture for next year, with the easing of international travel restrictions and return of direct air routes earlier this year, we have seen strong pent-up demand for Scotland from our international key markets, with North America nearly back to pre-pandemic levels and healthy bookings with travel operators for 2023."