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When Is it Cheaper to Buy Air Tickets Offshore?

SmarterTravel

Airfares within the U.S. are complicated enough, but they can get even more mysterious when you fly internationally. One reader asked about offshore prices for a round-the-world (RTW) ticket:

“I noticed an around the world ticket purchased in the U.K. from one of the alliances is considerably cheaper than the U.S. price. Is there any way I can take advantage of that discount without actually being in the U.K. when I purchase the ticket?”

The short answer: The ticket price doesn’t depend on where you are when you buy the ticket, it’s determined by where you start your trip. If you want to buy at the U.K. price, you have to start your trip in the U.K. And the difference isn’t a “discount,” it’s simply different pricing for different markets.

This request raises the larger question of offshore ticketing, generally, whether for RTW or other sorts of trips. Here’s an update and second look at a subject I covered early last year.

Directional differences

Airlines establish ticket price levels in each country based on (1) their general pricing strategy and (2) what they think will sell in the local market. That means that even after conversion at current exchange rates, airfares on many international trips vary, depending on the direction of travel. Those differences are sometimes small and due mainly to short-term currency fluctuations, but at other times they’re significant, due to differences in the ways airlines approach local markets.

Last year, for example, transatlantic fares were about the same whether you started the trip in the U.S. or in Europe. Now, however, I see differences large enough to affect some buying decisions:

  • From Los Angeles to London, the cheapest economy ticket I could find on Virgin Atlantic for a round-trip in mid-June was $1,158. But from London to Los Angeles, the round-trip fare dropped to £441 (about $969 US; check XE.com for current exchange rates).
  • From Newark to London at the same time, all-business-class Silverjet charged $1,199 for a one-way ticket, but a trip from London to Newark was (after conversion) $1,008.

I was frankly surprised that the fares from London were below those from the U.S. I would have figured that the weak dollar would result in higher, not lower fares, from the U.K.

On the other hand, some fares remain lower when you buy your ticket offshore than when you buy in the U.S, especially for countries where airlines have concluded they can’t charge as much as they can in the U.S. or Europe. A 29,000-mile Star Alliance RTW ticket costs the equivalent of $6,686 when you buy it in Bangkok but $7,880 when you buy it in the U.S. That Bangkok price advantage, however, is a lot less than when I checked last year: The difference then was around 40 percent, compared with about 15 percent now. Clearly, the weak dollar has eroded the difference.

Official ticket rules

When you buy any airline ticket at a published (official) fare, you almost always have to deal with the rules established by the International Air Transport Association (IATA). And the IATA’s fundamental rule hasn’t changed in quite a while: Air tickets must be priced at the levels established for the country where the trip originates. Thus, when you buy a ticket from London to Boston, whether one-way or round-trip, you pay the price established in British pounds; a ticket from Boston to London is priced at the U.S. dollar rate.

Official airfares published in most countries are priced in that country’s local currency. In a few countries with weak currencies, however, official local prices are established in dollars, euros, or sterling, rather than local currencies.

In most cases, you don’t have to be in a country to buy a ticket for a trip that originates there&#8212or even buy from an agency located there. Airlines or agencies in any country with free currency flows can sell tickets for trips originating in other countries. But they have to charge the price established in the country where the trip starts: If that price is in some currency other than dollars, the agencies convert it to dollars at the going exchange rate. The global distribution system (GDS) used by most travel agencies makes those conversions automatically.

Airline restrictions

A few airlines and alliances try to limit your ability to take advantage of offshore deals by adding a residency requirement. If you buy a ticket in a country other than your home country&#8212and use a credit card&#8212they might require that the credit card be billed to an address in that other country. You can get around that requirement by going through a local agency that can handle a currency transfer for you or find another way to pay. If the price differential is substantial or you travel a lot, you can open a bank account in a country where outgoing fares are low and get an associated credit or debit card.

How to buy

Whenever you plan to buy an international ticket that doesn’t require round-trip purchase, in any class, you should always check on the prices in both directions. If the fare from your destination country back to your home is less than the fare from your home to that country, buy a one-way ticket to get there and buy your one-way return ticket at your destination country’s price. You can even buy both tickets before you leave; just make sure you price each way separately. Unrestricted tickets are often sold with no round-trip discount, so offshore buying can be advantageous.

Most consumers, however, use round-trip economy excursion tickets, which are typically a lot less expensive than two one-way tickets. Thus, you’re almost always better off buying a round-trip at your home country’s price, even when you fly to a country where local prices are lower.

Discount fares

Discount (consolidator) fares, of course, don’t have to conform to IATA rules. Airlines can sell tickets through discount outlets at whatever fares they think are right for each local market. When you shop the discount market, you should theoretically check prices for two one-way tickets as well as round-trips.

In my experience, local discount agencies almost always have better prices on trips that start in their home countries&#8212and a wider choice of options&#8212than discounters elsewhere. Thus, London discounters are better at getting deals for flights out of London than discounters in the U.S. or some other country. Unfortunately, we don’t have a worldwide list of discount agencies. The best ways to find them are to look at local newspapers or locally published travel magazines for discount ticket ads.

However, one way to access some of them from just about anywhere is through ETN. That website, an outgrowth of a large Amsterdam discount ticket agency, maintains worldwide networks of other discount agencies. You log onto the site, enter your trip needs, and ETN circulates that request among its long list of agencies. Presumably, several of them will respond with bids that you can then explore individually.

If you prefer to deal with an agency based in the U.S, check with one or more of the sites that specialize in discounted RTW tickets. Those agencies construct their multistop RTW itineraries by stringing together a bunch of separate discounted one-way tickets, so they’re familiar with ticket markets around most of the world. Among the agencies to check:

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