Investors flying high over ‘open skies’

Property Investors will benefit from the new Open Skies accord between the EU and the US, claims Property Showrooms...

Avid investors who are taking up investment property opportunities in the United States may see a higher demand for holiday lets as competition between airlines is about to get ferocious.

Following decades of strict regulation, free competition on transatlantic flights will finally come into effect on March 30th. Until now, only four airlines were allowed to reap the profits of the lucrative UK – US routes, which see in excess of 50,000 passengers a day.

The new Open Skies agreement which, when introduced in Europe, saw the likes of Ryanair and Easyjet break the market, will allow long-haul budget carriers to compete with giants such as BA or Virgin Atlantic.

Reduction in ticket prices

It costs an airline a little more than £200 to fly a passenger from the UK to the US; therefore, unless fuel prices fall, it will be highly unlikely that we will see off-peak fares reduce much further.

However, as major airlines such as Air France and Continental launch their new routes, we should see a great reduction in the price of tickets during peak time, that is the summer and Christmas seasons.

In the UK, as larger airlines move to Heathrow to launch budget flights to Fort Lauderdale and San Diego, budget carriers will be able to use spare take-off slots in cheaper regional airports and offer largely discounted airfares to users.

Zoom airlines is advertising return flights from London Gatwick to Fort Lauderdale in Florida for as little as £299 and to New York, in the middle of July, for just £339 including tax.

Brits flood Florida

According to the latest figures by the American National Association of Realtors, the majority of foreign purchases in Florida were made by the British. The main reason for most of these property purchases was as an investment with a view to renting the property or providing a holiday home to both family and friends.

America boasts third place in the world for tourist arrivals and first place for tourist expenditures, according to the UN barometer. Likewise, the USA’s 9% increase in arrivals in the first three months of 2007 speaks for itself.

As competition begins for the cheapest airfare to America, investment property in the USA, particularly in coastal areas, could begin generating some outstanding returns to investors.