European holidaymakers set for tariff price hike

Package holiday prices for summer 2025 were already forecast to be up 4.2% (£50pp), on average, compared with last year, back in January according to Which. But President Trump’s tariffs, on pause for now, are more than likely to come into force just in time to put the price of your summer holiday up.

That is because they are going to hike the costs for nearly every firm involved in flying passengers to their get aways. Aviation is far too much of a global business, reliant on intricate supply chains that criss cross borders for the impacts on margins not to be felt.

Consider the Boeing 787. Parts like wings, fuselage sections, and engines are sourced from countries such as Japan, Italy, the UK, and others. Any tariffs will just force the cost of this jet up. The same will be true of the Airbus A320 and Boeing 737, the workhorses of leisure travel, especially given by the proposed 25 per cent tariff on aluminium and steel as both materials are used in the manufacture of planes. 

Engine manufacturers will likewise be impacted. GE Aerospace’s chief Larry Culp is calling for the reintroduction of the tariff-free regime for the aerospace industry under the 1979 Agreement on Trade in Civil Aircraft.

Meanwhile, with Airbus and Boeing struggling to deliver new jets like the Neo and the Max for the last few years, the value of second-hand aircraft has gone up due to a supply/demand imbalance.

While there are reports that Trump is planning to spare carmakers from some of his most onerous tariffs, even if second hand aircraft are deemed exempt from tariffs – like used cars will potentially be – the value of these jets for operations or parts for maintenance will only increase more as airlines and other firms look to mitigate their tariff exposure as much as possible.

So, with costs rising, so will ticket prices. It’s basic economics.  Prices in 2024 were already at an all-time high in some markets and all the indications are that there is enough demand for travel for airlines to be able to hike prices and pass these costs on. For example, Eurocontrol, Europe's air navigation safety body which manages its airspace, says it is forecast to see 5.2 per cent more flights this summer.

Equally, according to research this year by the European Travel Commission, most on the continent have been planning longer and higher-budget holidays despite a slight drop in overall intent to travel.

One third of Europeans plan to spend €1,501–€2,500 per trip, while nearly one in five are considering spending over €2,500, the European Travel Commission found.

So, there is clearly – at least this for summer – enough intent to spend for most if not all costs from tariffs to be passed on by carriers.

This summer had been anticipated as the one where the cost of a holiday was going to drop from their post-Covid highs. With a glut of new hotel rooms set to come onto the market, prices were set to tumble. But the planned tariff regime looks set to delay that.

There may be a silver lining on the horizon though. If transatlantic travel continues to decline, carriers like BA or Virgin Atlantic may pivot back towards more flights in Europe next year, increasing coemption and therefore starting a price war for summer 2026.