Why do flights and hotel rooms cost so much more during the holidays?

Q Perhaps you could explain why a flight or hotel room costs so much more during the holidays than outside of them? For example, a seat on a plane has the same sunk costs – fuel, airframe, on-board staff, airport fees – so why does it flex so much?

IA

A Travel is unlike most other industries: it has very high fixed costs and low marginal costs. Consider a seat on a flight. Ownership and maintenance of the aircraft, plus staff salaries, property rental, etc, rack up a substantial bill irrespective of whether the plane goes anywhere.

Operating costs for a specific flight are modest, largely comprising fuel for the journey, wear on the engines, airport handling and air-traffic control fees. In comparison, the marginal cost of one extra person stepping on board is low: a per-passenger fee at the airport and a tiny amount of fuel for carrying them and their baggage.

Accordingly, there is a huge financial incentive for filling every seat on the plane. The same goes for a hotel (where the marginal cost is often little more than the room clean) and rental cars, which are not earning anything while they stay parked at the depot.

For a business to prosper, it must strive to fill its inventory while extracting as much cash as possible from each customer. On a wet Wednesday in early December, that will generally prove tricky, unless you happen to be a hotelier in the Caribbean. So the mechanism to use is price. Off-season, airlines will often price fares at levels that are well below the average cost of providing that seat, because the low marginal cost means almost any contribution is welcome to help offset the relentless bill for owning planes, paying pilots, etc.

During the peak, which almost invariably coincides with school holidays, travel firms use price to allocate scarce resources. Charging whatever the market will bear enables them to make enough money to see them through the many months when they are selling at below average cost. A good way to reduce peak pricing is to spread that demand, which is why a discussion about shifting school holidays is welcome – it could cut the cost of travel for many families.

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Q I’m going to Italy on Sunday 5 October, so I don’t need to apply to the new system with my British passport. But I fly back on Sunday 12 October. I know that’s the date on which the new system comes into force. Will it cause a problem on my exit?

Stephen B

A With barely a month to go before the European Union’s much-delayed entry-exit system (EES) comes into effect, I make no apology for tackling another query on this thorny subject. Ahead of the launch on 12 October, I am currently receiving far more questions about it than any other travel topic.

You say, “I don’t need to apply to the new system” because your outbound trip is a week ahead of the introduction of EES. That is correct – but it also implies that some action is required on the part of the traveller from 12 October, which is not the case. Your passport will be scrutinised and stamped on entry to Italy as normal on 5 October. When you depart, it will be examined and stamped again. This procedure will continue until 9 April 2026; there is no change in the analogue method, and the fact that a new digital system has taken effect on the day you leave Italy will certainly not cause you any problems.

So what changes on 12 October? An extra layer of red tape starts to be rolled out. Some third-country nationals entering and exiting the Schengen area (comprising most of the EU plus Iceland, Norway and Switzerland) will additionally be asked to provide fingerprints and facial biometrics. It is not yet clear which airports, ferry ports and international rail stations will be doing this from day one – nor what proportion of travellers using these hubs will actually be checked. There is no obligation in the early stages of the six-month rollout for individual frontier posts to record everyone’s biometrics.

In short, this is something that will be done to travellers rather than by them.

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Q I want to go to New Zealand via Singapore in business class in January. How can I choose a good travel agent that will recommend flights and be able to book first-night hotels, etc, without ripping me off? I am quite prepared to pay for this expertise, but my experience so far has been poor, with agents simply seeming to push whatever earns them the highest commission.

Graham C

A You are exactly the customer that any good specialist travel agent would love to have. You have a clear idea of where you want to go and when, and are comfortable about paying for professional guidance about how to make the most of a trip. You are prepared to spend many thousands of pounds; a test booking I made for a London-Singapore-Auckland return in January in business class came in at £6,500, without accommodation. So shop around, making it clear to each company that you are asking several firms to tender for a serious trip

Trailfinders has a well-deserved reputation as the UK’s leading specialist in tailor-made long-haul trips. I am also impressed by Travel Nation, with whom I booked my last trip to New Zealand. As a third option, I suggest you call Travel Counsellors; friends or family may recommend a particular individual travel agent.

Explain your criteria and see what they advise. If you plan to visit both North and South Islands, I hope they will suggest an “open-jaw” trip, flying out to Auckland but returning from Christchurch. They might also propose a return via the US to complete a round-the-world trip rather than go back via Singapore. The agent will be happy to book first-night hotels, and may well throw in extras such as room upgrades.

A really good professional will take time to talk through the opportunities for additional stopovers at some dream destinations on the way there and back, such as the Pacific islands – and conversely suggest options such as flying on Chinese airlines that might cut the overall cost. On such a long and complex trip, they should also offer support in the event that any element goes awry. Perhaps you will be kind enough to let me know how the search goes, and how the trip turns out.

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