HOLIDAYMAKERS in Scotland are likely to face more expensive travel and less choice from next year as the industry passes on the "Brexit effect" to consumers.
Airlines have been hit by falls in profits as the slump in Sterling translates into lower revenues in Euro and Dollar terms.
Statistics gathered by consultancy firm, RDC, show that air fares between Scotland and Spain began falling in the wake of the Brexit vote and the firm estimates that current ticket prices are around 10 per cent lower than they would have been if the UK had voted to remain in the EU.
The graph shows a dramatic fall in average fares from mid-September, reflecting the typical three-month lag between bookings and actual travel dates, as effect of June's referendum hammered ticket prices. However, the fall also coincided with a significant increase in capacity - the number of seats available across various routs - suggesting the fall in fares was a combination of both Brexit and greater availability.
Iain Smith, of RDC, said that the real effect of Brexit in the year ahead will be to "accelerate and exaggerate" the shrinkage of the airline market in Scotland.
He said: "The airlines are going to be forced to reduce services. Even if you forget about Brexit, there was probably too much capacity in the market. So if there's a reduction it's not necessarily to do with Brexit - but I think what Brexit means is that there will be a bigger reduction in services. It will exaggerate that effect.
"So maybe next by winter you will see some airlines drop services or trim capacity. I think there may have to be quite a big structural change."
Mr Smith said he did not expect any airline to go bankrupt or pull out of Scotland altogether, but that competition on popular sun routes would be likely to reduce from next October - potentially leading to higher fares.
However, there are hopes that while a weak Sterling might deter some Scots from heading overseas it will boost tourism into Scotland, as international visitors take advantage of an advantageous exchange rate.
John Strickland, aviation consultant at JLS Consultancy: "The upside could be that a stronger Euro and Dollar to the Pound could be a big boost to tourism and Scotland in particular could benefit from high-spending Americans coming in and obviously many Europeans.
"I know that France and Germany for example feature heavily in Scottish tourism, but at the moment it's too early to say."
Jochen Schnadt, chief commercial officer for bmi regional, said the airline is already in talks with tour operators in Germany with a view to offering flights from Germany to Scotland in summer 2017.
He said: "The pound being cheap is an incentive so we're looking at offering seven-day flights into Scotland."
Malcolm Roughead, chief executive of VisitScotland, said forward bookings for hotels and holiday accommodation in Scotland were "steady and, in some cases, increasing" following the Brexit vote.
However, Scots holidaymakers face paying a lot more for their packages from next Spring as the fall the in Sterling against the US dollar filters through to higher accommodation costs.
Traditionally, travel companies buy up hotel rooms months in advance in dollars - regardless of the local currency - to "hedge" their costs. As a result, the Brexit effect is unlikely to be reflected in prices until early next year, when one industry executive warned costs could "shoot up".
The source said: "Business at the moment is going through the roof. Customers are protecting themselves. They're booking now because they they're convinced prices will go up substantially.
"We know that the airlines and tour operators are beginning to run out of hedges. Once these hedges run out, the prices will shoot up. I think a lot of people are probably hedged through until February or March.
"I think the holidays will still sell though, especially in Scotland where we're starved of sunshine. People will just put off buying another car, a new fridge, a new carpet, and go on holiday instead, as they did during the recession."
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