Video: AAA forecasts more holiday travelers

By Travel writer
msnbc.com contributor
updated 11/19/2009 4:20:27 PM ET 2009-11-19T21:20:27

More Americans are hitting the road for Thanksgiving this year, but fewer than ever are heading to the airport. While that’s certainly a sign of the times, it may also be an indicator of long-term changes ahead.

According to AAA, 38.4 million Americans will travel 50 miles or more away from home over the holiday weekend, an increase of 1.4 percent over last year. The number of people traveling by car is expected to increase by 2.1 percent while the number of fliers is projected to drop 6.7 percent.

Not surprisingly, AAA attributes much of the drop in air travel to the current economic climate. But the group also points to longer-term trends that are influencing people’s approach to travel in general. Flight delays, slashed schedules, added fees and airport security, they say, have all contributed to an “astounding” 62-percent drop in the number of travelers that fly over the Thanksgiving holiday since 2000.

Clearly, the old math on flying vs. driving is penciling out in new ways. What was once a fairly straightforward equation — speed vs. cost — now requires a whole new set of calculations.

Frustrated fliers pay the price — or change their plans
Last week, the Air Transport Association (ATA) announced that it expected the number of passengers flying on U.S. airlines over the Thanksgiving holiday to drop 4 percent compared to last year. (ATA defines the holiday period as the 12 days between Nov. 20 and Dec. 1.) The group cited capacity cuts and “economic headwinds,” but didn’t address what some see as a fundamental change in travelers’ spending habits.

“A leisure traveler might have bought a domestic [cross-country] ticket for $350 last year,” says Rick Seaney, CEO of FareCompare.com, an airfare comparison shopping site. “Lately, $250 has been the breakpoint; above that, they just weren’t going to buy.”

The upshot has been a reversal in fare trends from last year and a headache for cash-strapped consumers. Last year, waiting until the last minute paid off, with average Thanksgiving fares dropping from $364 in September to $344 in October to $332 in early November, according to analysts at Bing.com. This year, the average fare climbed from $311 to $333 to $364 during the same period.

The increase has more to do with the aforementioned capacity cuts than any resurgence in demand. According to ATA’s latest data, U.S. carriers will offer a total of 679 billion domestic seat miles this year, down from last year’s already-slashed level of 730 billion. (Available seat miles, or ASMs, are a standard industry metric equivalent to the number of seats multiplied by the number of miles flown.)

That’s a drop of almost 7 percent from last year, a plunge that puts the industry’s overall capacity on par with the levels of the late 1990s — and just a fraction above what it was in the aftermath of the 2001 terror attacks.

Even without the increased fares and capacity cuts, air travel would probably have fallen this year. According to a just-released opinion poll from Maritz Research, the industry’s seemingly insatiable appetite for surcharges and add-on fees is also taking a toll. The latest affront: surcharges of up to $30 each way on more than a dozen peak travel days, including November 29 and 30. (More — and even larger — surcharges have also been announced for travel in 2010.)

Video: Cost of flying soars on peak travel days
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“Airlines continue to slam customers with fees by exploiting peak travel days,” said Rick Garlick, director of consulting and strategic implementation, in a statement. Consumers, he added, “are tired of feeling taken advantage of by corporate America.”

But the fees are part of a larger problem, says Jay Caulk, general manager of The Travel Experts in Pompano Beach, Fla., who cites his clients increasing frustration with the industry’s inconsistency: “One day, they’re changing the schedule; the next day, they’re withdrawing flights. One day, they’re lowering prices; the next, they’re raising them. It’s enough to make a Valium nervous.”

Or make a committed traveler work that much harder, which is what Julian Vasquez Heilig of Austin, Texas, found himself doing as he planned his Thanksgiving travels this year. Planning a family trip to El Paso, the professor of education policy at the University of Texas started tracking airfares as far back as late August.

His efforts are a testament to both his own perseverance and the proliferation of online distribution channels: Monitoring fare sales as they were rolled out. Regular visits to Hotwire and Priceline. Fare alerts from Orbitz, Travelocity and Southwest Airlines. “The system has gotten more complicated,” he says, “so you have to work it more.”

The payoff came about a month ago when one of Southwest’s Ding! fare alerts popped up with a good price, but a small catch: they’d have to fly on Thanksgiving Day. “We’d like to travel on Wednesday and Sunday, but the fare was like $350,” says Vasquez Heilig. “By flying on Thanksgiving and the Tuesday after the holiday, we’re paying around $230.”

Be prepared, be informed, go online
Price aside, those who travel on more traditional days will, no doubt, pay in other ways, too. With the major airlines hoping to shrink their way to profitability, remaining flights will be packed. Last month, the nation’s nine biggest airlines posted a combined load factor of 82.7 percent, up from 79.6 percent from a year earlier. The biggest increase was posted by Southwest, which jumped from 70.4 to 79.2 percent (based in large part on a 9.4-percent cut in capacity). Video: Tips every holiday traveler must know

On-time performance is also likely to suffer. Last month, just 77.4 percent of flights landed within 15 minutes of their scheduled arrival, according to data from FlightStats.com, a drop of seven percentage points from a year earlier. With an early winter already making itself felt in the western half of the country, an improvement for the holidays isn’t likely.

“There’ll be a storm somewhere,” says FareCompare.com’s Seaney. “You’ll be looking out the terminal window; it’ll be a sunny day, and your plane won’t be there. It’s gonna happen.” For stranded fliers, the situation is often exacerbated because gate agents often aren’t looped into situations that can change by the minute.

This year, at least, there’s a bright spot on the information front thanks to a proliferation of free Wi-Fi promotions. On the ground, Google is sponsoring complimentary Wi-Fi at 47 airports around the country, including Boston, Baltimore, Miami and St. Louis, through January 15. In the air, the deals include fleetwide access on Virgin America through January 15 and service on 260 Delta planes between November 24–30.

“If you get diverted in flight, you can actually get the word out,” says Seaney. “You don’t want Grandma driving to the airport in a snowstorm and have you not be there.”

Doing the math, deciding to drive
For many travelers, however, the calculus of air travel — higher fares, more fees and fuller planes — has become such a headache that driving is an increasingly viable option. Says Caulk, “If it’s going to Grandma’s and she lives 500 miles away? By the time you get to the airport and go through security, you might as well drive it.”

For Scott Russell, a financial analyst in Las Vegas, the reality hit home when he did the math on flying his family of four to Orange County, Calif., to visit his in-laws. “Usually, we can tickets for about $50 each way,” he says of his search back in September. “I got online and they were double the price. What we thought was going to be less than $500 was more like $900.”

Instead, and because both he and his wife drive two-seaters, he decided to rent a car. “The total, with tax and fees, was 180 bucks for a full-size car,” he says. “Even with the gas, it was a no-brainier.”

And gas prices, it should be noted, are expected to stay fairly stable for the holiday. On Monday, the average retail price nationwide was $2.63 per gallon. That’s up about 50 cents from last year, but soft demand and ample supplies are expected to keep prices from going any higher. “As long as gas stays in the $2.25–$2.50–$2.75 range, more people will opt to drive,” says Caulk.

Mary Maguire, director of public and legislative affairs for AAA Southern New England says much the same: “Last week, in Massachusetts at least, gas was 36 cents higher than at this time last year. While that’s a significant difference, it’s not a huge discrepancy, and it’s a far cry from the $4 we saw last year.

“Filling your tank is a pretty good deal compared to what it has been. That’s pretty inviting for people who have the itch to travel.”

Rob Lovitt is a frequent contributor to msnbc.com. If you'd like to respond to one of his columns or suggest a story idea, drop him an e-mail.

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