While the travel and hospitality industry has been upbeat about finally the tide turning after the recession, there is a lot of wariness underlying this sentiment.
The chief cause for this is the airfares that have been steadily rising — despite several low-cost carriers coming onto the scene — and the mergers that have dominated the industry. Since 80 percent of the market is still dominated by the four major U.S. airlines — American, Delta, Southwest and United — cost control doesn't seem possible in the near future.
But airline fares aren't the only thing causing a dent in travelers' pockets. Other airline fees are increasing as well — like the TSA's screening fees, which have doubled since July. These steady hikes planned by the TSA will raise an additional $16.91 billion for them in the next 10 years, and 65 percent of these will be used to fund security screenings. Airports are also set to raise their facility fees per boarding from $4.50 to $8, while the Customs and Border Protection want an immigration fee hike from $7 to $9 on in its on international tickets.
The bottom line is that flying is going to become more expensive, and the more stops you make, the more money you have to fork out. Any service that can be considered as an add-on will cost more. So premium seating, baggage fees and other such ancillary fees will cost at least an additional $80 more per ticket on an average.
The trend has everyone in the travel industry worried. Hoteliers and tour operators across the country are losing sleep because a high cost of air travel is directly proportional to low bookings. To counter these costs, we have seen an increase in road trips, but there is a limit to how much you can travel via road.
For an average traveler, the usual parameters like job, vacation time, kids, energy, distance, driving for long hours, car sickness, claustrophobia and more can be a huge deterrent. Most of the time there is a distance cap for road trips, which reduces the number of vacation choices. The alternative is air travel, but that seems to flying out of the regular American pocket. No wonder the industry is worried.
Prices have risen for both international and domestic flights — bad timing since Americans are poised to explore new territories around the world. Cost for an international ticket is up 2.3 percent, while a domestic flight is 4.5 percent costlier than last year, showing over a 20 percent jump in four years.
What makes things worse is that for a higher price, passengers are not going to see much improvement in their travel experience. Flights are still going to cramped and crowded, there are still going to delays and no special services to soothe frayed nerves.
It seems that the airfare hike at 2 percent has outpaced even the inflation rate of 1.5 percent. An Associated Press analysis of travel data showed that average domestic round-trip ticket including tax will cost $7-$10 more than last year. Industry stalwarts say that the hike is inevitable and these help the airlines offset their losses incurred from rising fuel prices and stay in the black.
But in their bid to survive and realize profits, are they running the risk of alienating their customers? Even with the economy turning, people have become cautious about spending, and the discerning traveler is going to expect more returns.
If things continue the way they are, business travel will once again see curtailment, and the leisure traveler will either turn to more road trips or just stay at home.
