London's cheaper, but summer fares are rising

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Since November, the value of a U.S. dollar in Britain has gotten 22 percent stronger, meaning that London is historically cheap for American visitors. Unfortunately, plane tickets have been getting pricier. What gives? And how can you find cheap(er) fares?

Round-trip tickets may be roughly $200 more expensive now than two summers ago (before the financial crisis hit full swing). One reason: British Airways cut its capacity (meaning, its planes and routes) by 23 percent in the past year. By cutting supply, BA can charge higher ticket prices. Other airlines have done the same.

The airlines lost a lot of money during the Icelandic volcano crisis. Airlines will try to try to make up the lost income. They'll hike the average roundtrip ticket between London and New York $40 this year, and up to $80 by 2012. Airlines will slowly bump up faresuntil they've recovered all of their lost money.

Airport taxes are another problem, says George Hobica, founder of bargain-hunting site Airfare Watchdog. "Britain continues to heap tax increases on London's airports, with a series of hikes in the past few years. And it looks like the taxes will go up again by the end of year."

So what to do? Hobica recommends you book a vacation package. Tour operators buy blocks of seats on planes up to a year in advance, and a year ago tickets were a lot cheaper than they are now. So tour operators can afford to discount the seats and pass along the savings to travelers in lower air-plus-hotel-plus-rental car packages.

Keep an eye out for "fare glitches" and last-minute sales are another thing to watch out for. Set up electronic sale alerts on Airfarewatchdog, tracks those periodic sale fares that only are available for a few hours or days. Be ready to pounce when any fare sales appear.

If you can't decide whether to book tickets today or wait a few days, check out the "buy-now-or wait" predictions on, a free service that takes out some of the guesswork. It'll give you a forecast on whether to buy today or later this week. Its crystal ball is historical airfare data. It looks at the past several years of airfare trends to deduce whether prices will rise or fall on any given route.

Last tip: Fly on Tuesdays or Wednesdays, which tend to be much cheaper days to fly than weekends.

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