Escalating travel prices and gas costs leave travelers with nowhere to run, and nowhere they can afford to hide this travel season.
Holiday Travel Season
The busy holiday travel season is upon us again, but this year will be different than most (for the second year in a row.) Last year, due to COVID-19, travel was down considerably during the holidays. Many chose to spend the holidays where they were rather than traveling. As early as four weeks ago, bookings began to pick up ahead of Thanksgiving and Christmas. While not yet returning to pre-pandemic levels, they were substantially elevated over last year.
“We’re already seeing significant momentum around international and domestic flight searches when compared to 2020, up 155 percent and 212 percent, respectively,” says Matt Clarke, the VP of marketing at online travel agency, Kayak. “When compared to 2019, however, both international and domestic flight searches are down, 52 percent and 43 percent, respectively.” – Travel and Leisure
A number of factors, like reduced crew availability and fuel costs, threaten the travel season this year. United CEO, Scott Kirby has already indicated that costs will be higher due to the price of oil.
He’s not alone, Delta has warned the same. Expensive flights and hotels aren’t the only issues facing travelers this holiday season. Escalating fuel prices, worker shortages, and inflation make this travel season even harder.
The West Texas Industrial and Brent Crude prices have hovered around $80/bbl for the last few weeks. In 2014, coming off some all-time high fuel prices, the price was around $90/bbl before dropping for the last six years to as low as $20/bbl. Throughout the last two years, it has waxed and waned ranging between $40-60/bbl most of the time. Coupled with more travelers than last year, rates will be higher.
Higher prices along with transportation infrastructure struggles at ports, some 80,000 needed truck drivers, and a global economy recovering from factory shutdowns over the last two years have made goods more expensive and harder to get.
“The annual increase in the consumer price index matched readings in June and July as the highest in 13 years, the Labor Department said Wednesday. Excluding the volatile food and energy categories, core inflation rose 0.2% in September and 4% compared with a year ago. Core prices hit a three-decade high of 4.5% in June.” – Associated Press
The Bureau of Labor Statistics reported fewer new jobs this week than expected; the United States currently has more open positions than ever before. Those labor shortages are driving the annual inflation and Consumer Price Index (CPI) as outlined above. It’s also worth noting that for the period of time used in the Labor Department’s figures, gas prices and food costs are excluded. As a measure of inflation, it’s not telling the whole picture when we exclude those major cost centers from the basket of goods that creates our inflation calculator. As these prices rise, economic activity will likely decrease, especially in discretionary goods or services – travel falls squarely in that category for most consumers.
Computer chip shortages have also affected the auto market, shutting down factories for the major auto manufacturers and pinching the market further for new cars, and elevating the used car market by as much as 24%.
In the past, family members that might have flown to relatives for the holidays won’t be able to substitute high airfare for cheaper fuel costs by driving themselves.
“The demand for car rentals in the U.S. this holiday season is already up 229 percent compared to 2019 and up 244 percent compared to 2020, an indicator that we could experience another car rental shortage this holiday season as we’re seeing an increase in those searching further in advance for car rentals than years prior,” says Clarke.” – T&L
Amtrak and bus lines are feeling the pinch too with worker shortages, and higher transportation costs.
Jack Dorsey, founder of Twitter but also of financial business, Square, and its Cash App added this with regard to the rates of inflation,
“Hyperinflation is going to change everything,” and In response to a user comment, Dorsey added that he sees inflation escalating around the world, too. “It will happen in the US soon, and so the world,” – Business Insider
So where do travelers go from here? They can’t drive themselves as fuel prices are already severely elevated and rising. Airfare is rising and with the rest of the inflation issues, there’s no budget to squeeze it from elsewhere. Consumers can’t rent cars due to both cost and availability (for those who do not own a car). Travelers may be stuck for the holidays whether they like it or not.
Fewer To Travel?
Will all of these cost and convenience challenges lead to fewer travelers this season? The data said “no” earlier this season but fuel has risen since that point as well. While vaccines and declining confirmed COVID cases in the US have pushed the figure higher than it was in 2020, those projections might be revised lower.
Southwest Airlines, the nation’s largest domestic carrier, has announced it will trim its schedules to account for a reduction in crew availability.
Something has to give. Slumping job numbers (see the prior link to inflation data from the Associated Press) with higher costs and less availability for flights and rental cars may force some to have another Zoom Thanksgiving.
Higher fuel costs, inflation of all prices, reduced workers, and more travelers than last year creates a terrible collision course this holiday season. There’s nowhere to run and nowhere to hide creating more discontent after our year(s) of discontent.
What do you think? Will the transportation challenges facing the country drastically alter the country’s holiday plans?