Coronavirus and Booking Travel: Considering the Risk

Coronavirus and Booking Travel: Considering the Risk

Travel and travel planning are being disrupted by the worldwide spread of the coronavirus. For the latest updates, read The New York Times’s Covid-19 coverage here.

On March 12, the day after the World Health Organization declared the coronavirus a pandemic, Sery Kim, an attorney in Coppell, Texas, noticed that the number of American Airlines AAdvantage miles needed to book a May flight to Barbados she had been eyeing dropped from 130,000 to 30,000 — a decrease of nearly 77 percent.

Thus set off a four-day hunt for future trips. In addition to Barbados, Ms. Kim purchased six round-trip Southwest Airlines tickets, starting later in March, to Washington, D.C., where she keeps an apartment for work. She paid $99 apiece for flights that normally cost upward of $183, with dates extending into September. She spent $93 on a late-April flight to Miami that usually costs around $330. Then she booked a safari vacation in July for about $900 round trip to Cape Town — about half what she paid for a South Africa flight in 2016.

Ms. Kim, 41, was indulging in what might be called flight arbitrage. Inexpensive airfare deals abound currently; couple those with newly relaxed airline change and cancellation policies and some travelers are seeing little-to-no risk in pointing, clicking and purchasing. They are betting that things will have improved enough to travel, and if they haven’t, they can roll their money forward into an even later trip.

“There’s an arbitrage opportunity that has never really existed in modern air travel,” said Scott Keyes, founder of Scott’s Cheap Flights, an online alert service with more than two million members. “Not only are fares super low, but to be able to cancel if you decide not to take the trip is rare. And there are absolutely people taking advantage of it — not in a pejorative sense, but literally by booking flights for when hopefully, fingers crossed, things are safer.”

To proceed cautiously amid travel advisories and border closures, Scott’s Cheap Flights is only promoting deals from July onward, and only for airlines waiving change and cancellation fees.

After her April tour through Japan was canceled, with all of her payments successfully recouped, Karen Burrows, a 56-year-old health care worker, used Scott’s Cheap Flights to purchase a $282 round-trip flight from New York City to Athens, Greece, departing in September.

“It’s a comfort — a consolation prize — and a way to look forward to something else after the disappointment of Japan,” said Ms. Burrows, who lives in Feura Bush, N.Y.I’ll probably wait until August, and if it’s not looking like things are going to be healthy, I’ll make changes with the airline. I wouldn’t make any nonrefundable accommodations at this point, either.”

September prices for Athens flights from New York City often cost upward of $1,000. But Ms. Burrows has another reference point: Two years ago, she paid $446 for a flight to Athens from Newark, N.J. — another Scott’s Cheap Flights find.

“The comparison of real prices today versus reference prices that consumers have in their memories — ones they may even be unaware that they hold — is leading to this kind of purchase behavior,” said Priya Raghubir, a New York University Stern School of Business professor who studies consumer psychology and spending.

Before the coronavirus pandemic, Rina Baraz Nehdar, the editor in chief of the website L.A. Family Travel, had been watching round-trip flights from Los Angeles to Rome; August fares hovered around $900 apiece. In early March, she found $400 flights on Ovago, an online travel agency.

“Our trip isn’t scheduled until August so I pray we still get to go, and if so, I’m stoked about our great bargain. Since we can only travel during the time school is out, we typically have to pay premium prices. This was a nice relief for us,” said Ms. Baraz Nehdar, 45.

Cheap summer flights like the ones Ms. Baraz Nehdar found are expressly attributable to the coronavirus, said Mr. Keyes, of Scott’s Cheap Flights. Even though air travel has become generally less expensive in the last 40 years, summer has remained a much-sought-after — and therefore pricey — time to fly.

And with airlines poised to burn through $61 billion of their cash reserves during the second quarter of this year, according to a recent analysis by the International Air Transport Association, having customers on the books — even if they eventually cancel — is a strategic move.

“Selling cheaper tickets for future travel is a good way for airlines to generate sales activity and also start restoring consumer confidence for future travel, which gets shaken badly in events like this,” said Khalid Usman, senior vice president at Oliver Wyman, a management consulting firm.

Although inexpensive airfare affects yield — the average fare per passenger per mile — it also helps drum up demand. According to new data from Hopper, a travel-booking app that analyzes and predicts flight prices, round-trip domestic airfare is down about 41 percent from last year and 44 percent from 2018.

Hayley Berg, Hopper’s economist, has seen demand shift to the latter half of the year; demand for international travel doesn’t pick up again until August. Skyscanner, a travel-deals website and app, saw a slight uptick in flight bookings in the last week of March (compared to earlier in the month) for departures in August, September and October.

But hopeful travelers looking to take advantage of what is effectively a buyers’ market should still know what they’re getting into.

“While governments around the world are planning to provide support to airlines financially, some element of financial risk for travelers remains, such as airlines canceling flights or, in the worst case scenario, airlines going out of business,” Mr. Usman said.

According to a policy that was reiterated by the Department of Transportation in early April, passengers are entitled to cash refunds if their flight is canceled (or substantially changed) for reasons relating to the coronavirus. Facing travel advisories and decreased demand, many airlines have already significantly reduced their service.

But passengers who voluntarily cancel may have little choice but to accept a voucher, which might not cover the cost of a more expensive ticket down the line and often expires 12 months after the original booking date.

That’s why some experienced travelers, like Nelson Yuan, a Hong Kong–based investment strategist who flew around 300,000 miles last year for business, haven’t gone beyond window-shopping.

“Cash is fungible. At this point, many airlines are effectively not giving refunds despite their stated policies; they’re short on cash so they’re pushing credits,” said Mr. Yuan, 37. “In that case you’re basically giving them a short-term loan.”

Ms. Kim was forced to cancel her Miami trip (without penalty) because the hotel she had hoped to book is closed. But despite the widespread stay-at-home orders and quarantine-on-arrival advisories, including in Barbados and South Africa, she remains undeterred about her other plans.

“Unless the airlines cancel the flights, I’m planning on going,” she said.

Sarah Firshein is a Brooklyn-based travel writer. If you need advice about a best-laid travel plan that went awry, send an email to travel@nytimes.comSarah is also our Tripped Up columnist.

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