Here’s what you need to know.

How low will prices go?

For the rest of 2020, demand for flights is impossible to predict. When, where and how travel restrictions will be lifted in the short term is anyone’s guess, but for those happy to make plans slightly further into the future there are already some very low prices being offered for long-haul flights.

Coronavirus pandemic: top holiday spots hold out for recovery

Cheap flight alerts service Dollar Flight Club, which aggregates flight data for over a million people in over 100 countries, predicts that air fares in 2021 will be 35 per cent lower on average than they were in 2019.

Its report covers international and domestic flights, and assumes that travel will resume on May 31.

Dollar Flight Club reports finding round-trip fares for flights departing in 2020 and 2021 reduced by as much as 65 per cent compared to pre-Covid-19 prices, including Los Angeles to London return for US$329, Chicago to Paris return for US$278, and New York to Amsterdam return for US$278.

When demand ‘falls off a cliff’

The impact of Covid-19 on our lives may be unprecedented, but the aviation industry has been in a similar predicament before. Dollar Flight Club’s report is largely based on data points after the September 11 terrorist attacks and the 2008 financial crisis.

“Directly following September 11 and the great recession, travel demand fell off a cliff, and to survive, airlines took action to dramatically cut costs,” reads the report. “They dropped prices to stay competitive, reduced the number of routes offered, and decreased flight frequency.”

Should you buy cheap airline tickets now?

Despite all the uncertainty, a trip is “a great thing to look forward to and focus on planning”, says Jon Thorne, director of user satisfaction at Skyscanner.

It’s a personal choice about whether now feels like the right time to start thinking about a trip. However, there are two airline policies you need to find out about if you decide to book anything. First, check the airline’s cancellation policy and what it offers in such an event (a full cash refund or a “travel voucher” valid for a fixed time, for example); and second, crucially, the policy on what happens if you decide not to travel.

What are ‘flexible tickets’?

Flexible tickets are what the airline industry is currently pinning its hopes on. As a general rule you can cancel or change your dates for free.

For example, Cathay Pacific is offering one year of unlimited flight changes without extra costs, which applies to existing tickets and also to all new tickets bought up to June 30.

However, that is relatively generous compared to the wider industry.

“If the flight you booked isn’t operating, then you will often be allowed to rebook, get a voucher, or in some cases get a refund of your money, but it varies from airline to airline,” says Tom Hughes at online holiday rentals platform Clickstay.

“For example, Thai Airways state that they will only waive the refund fee for bookings affected by flight cancellations.”

The implication here is that if your flight isn’t cancelled then you can still get a refund, but may need to pay some sort of refund fee. Likewise, Singapore Airlines is offering only a flight credit, not a refund. In that case, consider whether you would be happy with a voucher that has to be spent with the same airline.

What precautions to take when making a booking

Skyscanner has added an option on its website to only show airlines with flexible tickets. However, despite that, Thorne still advises caution.

“The landscape is changing day by day as airlines respond to the changing circumstances, so it is advisable to check policies at the time of booking,” he says.

Thorne also says to take out travel insurance before booking and check the level of cover. Flight cancellations will be very possible in the foreseeable future, so make sure you know airlines’ policies.

What about subsidised tourism?

If tourists aren’t coming, why not pay to bring them? Visit Sicily, a government tourism agency for the Italian island, is launching a scheme that would see it pay 50 per cent of the cost of tourists’ flights and a third of their hotel bills.

 Should travellers rely on sweeteners like this? “I think this is an unworkable marketing ploy [because] government policy is going to override any incentives offered by a regional tourist agency or trade group, and it also makes the whole issue of changing a booking and getting a refund even more convoluted,” Hughes says.

“For example, imagine Phuket is offering to pay half of my flights to try and lure me and my family there. How will they police this? Is it with the national flag carrier or any airline? How can I demonstrate how much I have spent on my flights? What happens if the government then changes its policy on arrivals? How do I get a refund? What if I want to reschedule my flight for the following year?”

He believes a better way to tempt tourists to destinations would be to give them, say, US$200 in vouchers to spend on hotels, restaurants and attractions.

Short window of opportunity

We may be seeing an imminent era of very cheap flights, but do not get too comfortable. According to Dollar Flight Club there could be a nasty side to it all as we’re bound to see a reduction in the number of flights.

“We can expect lower airfare prices in the short term,” reads the report, “and in the long term, as pent-up travel demand picks back up, we will see airfare prices increase substantially above 2019 levels.” In fact, the report predicts that beyond 2021 prices of airline tickets could increase by 27 per cent on average until the end of 2025 as demand rebounds.

The evidence again comes from what happened post-September 11, when air fares dropped 18 per cent on average, before rebounding in 2003, when they increased by 25 per cent. Similarly, after the 2008 financial crisis prices dropped 21 per cent on average, but by 2012 they had increased by 24 per cent.

The industry is likely to see some big airline mergers, and an increase in code-share flights; low-fare carriers may fail or be bought up. At the same time, the number of flights will be reduced. All that means increases in ticket prices are likely.

Ultimately, the aviation industry will return to normal, but the next few years are going to be unpredictable. The window of opportunity for savvy travellers to snap up cheap tickets could be short, but it’s only worth making plans if you know the policies around cancellation and understand what risks you are taking.