How low can long-haul fares go?

You want to see the world as it really is, but you don't want to slum it. You're discerning, but you're open to new ideas. You've got a bit of cash, but you're not exactly loaded. You know what you are? You're a flashpacker. Here we're showing you how to flashpack to the ends of the earth. Find out why you need to snap up those cheap long-haul flights now. Take your pick of the best and smartest bargains to exotic places. Get your family to the Caribbean without going broke. Discover luxury Thailand on a budget. And remember: leave that manky backpack at home!

Low long-haul fares generally come from two sources: new carriers offering low-price tickets or discounted economy seats on planes run by scheduled and charter airlines. Of the new generation of carriers, Canada's Zoom Airlines is something of an exception, currently offering a headline one-way fare of £99 plus tax for flights from the UK to Canada. Bargains can be found with Taipei-based Eva Air, which flies from the UK to Bangkok, and India's Jet Airways, flying Heathrow to Mumbai and due to begin flights to Delhi this autumn.

But the best choice is offered by scheduled airlines such as British Airways, its cheap seats funded by the profits made from first- and business-class passengers, and spare seats on charters that cannot be filled with the package-holidaymakers that the likes of Monarch Airlines fly around the world on behalf of tour operators. These tickets are not just available from the airlines but through tour operators and internet sites.

So, if you shop around, fly outside school holidays and away from weekends, and keep an eye out for last-minute deals on charters if you are heading for a resort, you can still pick up a bargain. And that landscape is unlikely to change. There may never be a long-haul version of the likes of Ryanair or easyJet, because their operations work on the basis that they can shuttle aeroplanes short distances many times a day, with quick turnarounds.

Tim Jeans, the managing director of the scheduled arm of Monarch Airlines, said: "We do a seat to Goa at £350 and to Cancun at £270. By any measure, that is low-cost. But the idea of long-haul tickets at £99 one way is not going to happen. The numbers don't add up. The fuel price alone means it costs about £70 per seat to fly to the Caribbean or Orlando."

Kieran Daly, the editor of Air Transport Intelligence, an online news service, agrees. "The UK charter carriers flying into Florida are low-cost, long-haul services in all but name," he said. "But many of the advantages open to short-haul low-cost carriers are not there on long-haul. Once you've flown to New York, you can't take the aircraft back the same day."

In any case, who would want no in-flight service on a six- to 10-hour flight? If anything, there is a trend towards offering extra frills, such as larger seats, extra leg room and queue-jumping at check-in and boarding, to those prepared to pay.

Golden Caribbean, which operates a weekly service to Grenada, Tobago and St Kitts, offers a three-class service, with fares starting at £299 return. Martin Cooper, the managing director, said: "There is a market for a business-class product on a charter, with an armchair seat and lots of leg room. It's a comfortable ride. Being sat in the back of a cramped aircraft is no fun. But putting in fewer seats does put up fares."

At the upper end of the market, MAXjet is due to start a "luxury low fare" business-only service from Stansted to JFK in New York on 2 November with prices starting at £599 one way.

But it is not only practical problems that will inhibit any further cutting of prices. The real spectre on the horizon is the rising price of oil. BA raised its fuel surcharge to £30 per long-haul flight this month and most other airlines followed, adding 20 per cent to some fares.

"Charters are feeling the full weight of the fuel price for summer 2006 and it is being passed on in prices," said Jeans. "On the scheduled side, you can't recover the increased costs just through raising fares, but it's going to feed through. It's already adding £40 to £50 per round trip. In general, prices will be higher next year."

Cooper believes that the impact could be more far-reaching. "Long-haul fares go up and down, and I remember predictions of oil going to $100 a barrel in the 1970s," he said. "But I don't think prices are sustainable at the current level. Airlines are going to have to cut capacity. There will be fewer flights and that will keep prices up."

Some carriers may be forced to cut flights to avoid going out of business. The International Air Transport Association reports that airlines are doing everything to save fuel, right down to washing aircraft more often to reduce wind resistance. But it still expects carriers to make a combined loss of £4bn this year. A spokesman said: "Relief on oil prices is not likely any time soon and airlines are not able to charge enough to support the cost structure. Prices have dropped 30 per cent in the past decade, and consumers don't expect prices to rise. Whenever airlines can claw back prices they will. But it is fiercely competitive."

Daly thinks there is a bigger problem. "The air transport system is essentially dysfunctional. Two of the biggest carriers in the US, Delta and Northwest Airlines, have just gone into bankruptcy protection and other airlines are not in much better shape. There has to be more realistic pricing and a more realistic cost model. The costs that most need to be taken out are salaries. That is what the low-cost carriers have done - it's probably impossible to do airport ground-handling any cheaper than Ryanair, for example."

So short-haul fares have probably gone as low as they ever will, and there are real barriers to reducing long-haul fares. Yet cost pressures will lead to continued job-letting across the industry, so expect to find fewer and fewer people to talk to at airports and airlines when things go wrong.

Sooner or later, too, some of the environmental costs of flying will have to be reflected in prices. Air travel will account for 15 per cent of all carbon emissions by 2050, according to the Intergovernmental Panel on Climate Change, yet aviation fuel is the one form of oil on which there is no tax.

Daly warned: "Aviation is going to get bitten by the environmental issue. The degree of growth forecast is not compatible with the environment." Simon Evans, the chief executive of the Air Transport Users' Council, agrees. "It is cheaper than ever to fly," he said. "But in the long-term, the cost of travel is going to rise. It's inevitable. Make the most of cheap fares while you can."

WHERE TO FIND THE CHEAPEST FLIGHTS

Opodo (0871 277 0091; www.opodo.co.uk)
Expedia (0870-050 0808; www.expedia.co.uk)
ebookers (0870-814 0000; www.ebookers.com)
Trailfinders (020-7938 3939; www.trailfinders.com)
Virgin Atlantic (0870-380 2007; www.virgin.com)
Eva Air (020-7380 8300; www.evaair.com)
Zoom Airlines (0870-240 0055; www.flyzoom.com)
Golden Caribbean (0870-777 6911; www.goldencaribbean.com)
Travelmood (08700-66 00 04; www.travelmood.com)
Airline Network (0870-700 0543; www.airline-network.co.uk)
Jet Airways (00 91 11 516 41414; www.jetairways.com)
Quest Travel (0870-442 3542; www.questtravel.com)
Travelocity (0870-111 7061; www.travelocity.co.uk)
MAXjet (0800 0234300; www.maxjet.com)
Excel Airways (0870 169 0169; XL.com)
British Airways (0870-850 9 850; www.ba.com)
Selected Monarch charter services can be booked through Odyssey Worldwide (0870-429 5090; www.odysseyworldwide.co.uk) and Avro (0870-458 2847; www.avro.co.uk)