Holidaymakers in Europe bracing for increased costs due to tariff increases
Feeling the Heat: Summer 2025 Package Holidays and Trump's Tariffs
Get ready to dig deeper into your wallets, sunseekers! With aforethought price hikes of 4.2% per person (£50) already on the table for summer 2025 holidays, thanks to Which,'s forecast back in January, things are about to heat up even further. The looming specter of President Trump's tariffs, currently on a brief hold, is all but guaranteed to drive the cost of your dream getaway skyward.
Why, you ask? Well, it's all about the global nature of the aviation biz. An intricate dance of supply chains that crisscross borders influences margins too greatly to ignore.
Let's take the Boeing 787, for instance. Components like wings, fuselage sections, and engines hail from various corners of the globe, such as Japan, Italy, the UK, and beyond. Tariffs will inevitably boost the cost of this jet. The same goes for the Airbus A320 and Boeing 737, the mongrels of leisure travel, particularly considering the proposed 25% tariff on aluminum and steel, as both materials are crucial for aircraft manufacture.
Engine manufacturers won't escape unscathed, either. GE Aerospace's big-wig, Larry Culp, is urging for the reinstatement of the tariff-free regime for the aerospace industry under the 1979 Agreement on Trade in Civil Aircraft.
Airbus and Boeing's struggle to pump out new jets—the Neo and the Max—for the last few years has led to an increase in the value of second-hand aircraft. With reports that Trump is considering sparing carmakers from his heaviest tariffs, even if second-hand aircraft are spared, the demand-supply imbalance will continue to send aircraft values soaring. This, in turn, means that airlines and other players in the game will seek ways to mitigate their tariff exposure, which all boils down to higher ticket prices. It's basic economics, folks.
It's worth noting that 2024 saw some record-breaking price highs in certain markets, and all indications suggest there's more than enough demand to allow airlines to hike prices and pass these increased costs on. In fact, Eurocontrol, Europe's air navigation safety body, is projecting a 5.2% increase in summer flights.
Moreover, research this year by the European Travel Commission indicates that most continental dwellers have been plotting longer and costlier holidays, despite a slight dip in travel intent. One-third are planning to drop €1,501-€2,500 per trip, while nearly one in five are mulling over shelling out over €2,500. In other words, there's a fair amount of loose cash floating around, just waiting to be spent.
This summer was expected to mark a drop in holiday expenses from the post-Covid highs, owing to a glut of new hotel rooms about to hit the market. However, the proposed tariff regime seems destined to nip that in the bud.
On the bright side, if transatlantic travel takes a nosedive, airlines like BA or Virgin Atlantic might shift their focus back to beefing up European flights for the following year, potentially setting off a price war for summer 2026.
As for our wordsmith: the article is penned by none other than Gediminas Ziemelis, a Lithuanian-born tycoon living large in Dubai. He's the founder and Chairman of the Board of Avia Solutions Group, the world's leading ACMI (Aircraft, Crew, Maintenance, and Insurance) provider. With operations across 17 different aerospace business segments and a 15,000-strong team spread across more than 70 countries, this Irish-based titan offers aviation services ranging from aircraft maintenance to pilot and crew training. In 2023, this global powerhouse generated a cool $3 billion in revenue. Known for his attaché-style management prowess, Gediminas has founded more than a hundred start-ups, half of which are still thriving. He's also orchestrated four successful IPO/SPO processes and raised over a billion euros in global public capital markets.
Sources:
- The Independent: How Trump's Steel and Aluminium Tariffs Could Affect Your Summer Holiday
- The Guardian: Trump's Tariffs and Travel: How Trade Wars Could Hit Your Holiday Plans
- The Telegraph: How Trump's Tariffs Could Affect Your Summer Holiday
- Business Insider: The Ways Trump's Tariffs Could Bring Higher Prices for Summer Travel
The escalating cost of travel due to tariffs may impact not only the aviation industry, but also your lifestyle and business expenses, for instance the money allocated for leisure holidays.
Given the increased demand for more expensive holidays and the projected 5.2% rise in summer flights, it's likely that travel businesses will continue to raise ticket prices, affecting everyone's wallets, particularly sunseekers for next summer's escapes.
