Massive summer travel demand drives skyrocketing costs
Most Americans are eager to travel this summer, but skyrocketing costs could upend their vacation plans.
Airfares rose nearly 19 percent from March to April, according to recent Labor Department data, the largest month-over-month increase for plane tickets on record, and are up 33 percent from last year. Hotel and vacation rental prices are also rising, leaving travelers with few options to save money.
Those price increases are being driven by massive demand for summer travel. Roughly 90 percent of U.S. travelers plan to take a trip in the next six months, and 35 percent expect to travel more this summer than last, according to data from the U.S. Travel Association.
“Prices are having little impact on Americans’ summer travel plans, though some travelers will take fewer or shorter trips or adjust their travel budgets,” said Tori Emerson Barnes, the travel group’s executive vice president of public affairs and policy.
The global travel and hospitality industry shed millions of jobs at the height of the pandemic as travel slowed to a crawl. With large numbers of Americans taking trips for the first time since the start of the pandemic this summer, airlines and hotels often don’t have the capacity to meet demand, driving prices higher.
Airline executives predict that U.S. airports will process 3 million travelers on a single day for the first time ever this summer. Airfares skyrocketed in recent months as summer flights quickly sold out.
Elevated costs may already be pricing some Americans out. The number domestic flight bookings dropped 17 percent from March to April, according to data from Adobe Digital Insights. Still, last month’s bookings were 5 percent higher than the same period in 2019.
“An uncertain economic environment is pushing some consumers to reorient their travel plans,” Vivek Pandya, lead analyst at Adobe Digital Insights, said in a note. “We see indications however, that some have chosen to delay their travel plans rather than to cancel them outright. While bookings for Memorial Day are down, summer travel is above pre-pandemic levels.”
Travel firm Hopper predicted that airfares will rise another 6 to 12 percent before peaking in June.
Hannah Walden, communications manager at Airlines for America, an industry trade group, noted that April prices were still 13 percent lower than the same month in 2019, before COVID-19 sent airfares plummeting.
Record-breaking fuel costs, propelled by Russia’s invasion of Ukraine that spiked global oil prices, are being tacked onto airfares. The price of jet fuel soared 151 percent over the last year and rose 8 percent over the last month, according to data from S&P Global.
Travelers have fewer seats to choose from than they did in the years leading up to the pandemic. Major airlines cut down on their spring and summer schedules to mitigate the impact of higher fuel costs and avoid a repeat of high-profile delays and cancellations that left travelers stranded last year.
For the second quarter, Delta Air Lines and United Airlines trimmed their number of total seats by 14 percent and nearly 17 percent, respectively, compared to the same point in 2019, according to travel analytics platform Cirium.
Airlines say that they don’t have enough pilots to expand their schedules. At the height of the pandemic, airlines gave early retirements to pilots who never returned to the workforce, despite receiving $54 billion in federal aid to keep workers on the payroll, which executives say wasn’t enough to cover all of their employees’ salaries.
“The pilot shortage for the industry is real, and most airlines are simply not going to be able to realize their capacity plans because there simply aren’t enough pilots, at least not for the next five-plus years,” United CEO Scott Kirby told investors last month.
Sen. Lindsey Graham (R-S.C.) is preparing to unveil legislation that would raise the mandatory retirement age for commercial airline pilots by at least two years. Under federal law, pilots must retire at 65 years old, an age limit that Congress raised from 60 in 2007.
Some in the airline industry have pitched the change as one way to prevent the shortage from getting worse, but they acknowledge that it wouldn’t make an impact on airlines’ capacity this summer.
Red-hot inflation is seeping into other goods and services travelers rely on.
Last week’s Labor Department report found that hotel and motel prices rose by nearly 23 percent since April 2021. The price of rental cars and trucks soared more than 10 percent annually as the global chip shortage continued to limit the nation’s supply of vehicles.
Experts expect both figures to climb further as summer reservations sell out. After a price spike late last month, average nightly hotel rates in the U.S. are up 42 percent from the same period last year, according to Hopper.
Meanwhile, Airbnb’s average daily rates are 37 percent more expensive than they were at the same point in 2019 and up 5 percent from last year, the company’s chief financial officer, Dave Stephenson, told investors earlier this month.
“We think that [prices] will likely moderate throughout the back half of the year as the mix continues to adjust more toward cities, more cross-border, which have lower average daily rates, but price appreciation has remained high and stickier,” he said.
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