How Brexit will have an immediate impact on US travelers

The United Kingdom’s decision to leave the European Union sent shockwaves through the world on Thursday night. The full impact of the decision won’t be felt for months or even years, but one place where change will be immediate is travel.

When the vote to leave the EU was announced, the British pound plummeted, dropping 11% and reaching as low as $1.32 — which is the lowest it’s been since 1985 when the pound fell to $1.05. The pound has now leveled out to $1.36.

As the summer travel season ramps up, the timing of Brexit could have a huge impact on US travelers planning to visit Europe. Here’s what you need to know:

London is calling

Deciding whether you want to visit the UK boils down to simple math. In June 2015, the British pound was at $1.56. Today, it’s $1.32. Simply put, this summer it will be more affordable to visit major cities like London and Edinburgh than it has been in past years. From food to retail and hotels, your money will go farther. For instance, last June a standard room at the Strand Hotel in London’s West End would have cost you £259 or $404 a night. Right now, the same room will cost $352 a night.

According to Patrick Surry from Hopper, a travel prediction site, the border implications of Brexit could also benefit travelers. “Additional border controls are likely to make London less attractive as a European transit hub,” Surry told Yahoo Finance. “Along with a cheaper pound easing local operating costs, this could lead to lower fares to the UK in the medium term.”

Watch the euro

After the Brexit announcement, the euro also dipped about 3%, reaching $1.10. On June 24 of last year, the euro was at $1.12. Admittedly, traveling to countries like Paris, Greece and Italy won’t be wildly cheaper than last summer, but every saved dollar counts.

Airfare could increase

The UK’s membership in the EU has let it enjoy the benefits of the European open skies agreement. This deal was inked in 1994 and allowed any EU airline the freedom to fly to any point in Europe.

This agreement has made it possible for low-cost airlines like Ryanair and easyJet to successfully operate in Europe, offering affordable airfare for visitors hopping from country to country. The competition among these low-cost carriers has benefited travelers flying to Europe from the UK, but that might change in the next couple of years. (Though the Brexit vote was Thursday, It will take a couple of years for the UK to actually separate from the EU.)

Once it leaves EU, the UK will have to create new air service agreements for its airlines to travel to other countries, which could ultimately result in higher airfare.

“In the long run, any British exclusion from European open skies agreements would reduce competition and put upward pressure on prices within and to/from Europe,” says Surry.

EasyJet’s Chief Executive Carolyn McCall responded to the Brexit news by pleading for the government to leave aviation out of its decision.

“We have today written to the UK Government and the European Commission to ask them to prioritise the UK remaining part of the single EU aviation market, given its importance to trade and consumers,” she wrote in a statement on the easyJet website.

Major carriers like British Airways are also feeling the impact. The International Airlines Group (IAG), owns the airline and released a statement saying it doesn’t believe the UK referendum will have a long-term impact on its business. However, the airline does believe the initial shock of the Brexit news might affect airfare in the short-term.

“While IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015,” wrote Chief Financial Officer Enrique Dupuy de Lome.

Brace for longer lines

Similar to how Canadian travelers get to use the US citizen line at customs checkpoints in the states, EU citizens get to use a separate and shorter customs line at European airports. This could all change with Brexit.

In 2015, 75 million passengers arrived and departed from London’s Heathrow airport. It is safe to assume that a large number of these travelers belonged to countries in the EU, which means they used a separate line and faced fewer restrictions in customs. With Brexit, it is likely that they will now use the general line (used by US citizens), and if the airport doesn’t allocate money and resources to deal with gridlock, things could quickly become a nightmare.

In an interview with Bloomberg, Charlie Leocha, president of the consumer advocacy group Travelers United, expressed his belief that the UK could face the same issues that the US encountered while installing automated border control kiosks at customs checkpoints around the country.

“Improving the process for customs and immigration in the US took major cooperation from airlines and airports over an extended period of time. The problems we’ve had with this in the US are going to replicate in the UK — and it’s going to be a mess,” he said.

We’ll hold out faith that he’s wrong, but just in case, it’s probably a good idea to bring an extra magazine to read in the customs line if you’re traveling through Heathrow.

Have you have questions about what Brexit means for US travel? Email us at [email protected].

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