It’s the middle of July — do you know where your summer vacation is?
According to the Travel Industry Association (TIA), the non-profit trade group that represents the U.S. travel industry, Americans are expected to take more than 327 million leisure trips during June, July and August this year. That’s equivalent to 109 million trips a month, 3,554,348 trips per day and a skosh over one trip for every man, woman and child in the United States.
Clearly, somebody out there is still traveling this summer. They may not be going as far — or spending as much or staying as long — but they’re definitely going.
Such numbers, of course, don’t mean much without context. The total, which is based on one person taking one trip, represents a projected decline of 1.2–1.5 percent from last year. Whether it’s the frustration of flying or $4-per-gallon gas, the summer travel season is shaping up to be among the most challenging in years.
“It’s a combination of psychology and discretionary income,” says Douglas Shifflet, whose company, D.K. Shifflet & Associates, surveys 60,000 travelers a month. “People are looking at their credit card bills, and they’re facing trade-offs. Yet they’re still saying they want to travel.”
If you’re planning on hitting the road or catching a plane over the next month and a half, here’s what you’re likely to find ...
Fewer people are flying — and who can blame them?
Last summer, Brenda Chaney, a sociology professor at Ohio State University, flew from Columbus to Austin, Texas, three times to visit her daughter. This year, she says, she’s only going once: “Last May, the fare was less than $200. This year, all we found was $300-plus.”
“It all depends where you sit in the country,” says Rick Seaney, CEO of Farecompare.com, an airline-ticket research site. “If you live in a small city, fares might be up 50–70 percent over last year; if you live in a bigger city or one served by Southwest, they may be up only 10–15 percent.”
But average increases don’t tell the whole story, says Seaney, who keeps a running tally of airfare hikes to gauge the cost of flying. In 2007, he notes, the six legacy airlines tried to raise fares 23 times, 17 of which were successful (meaning the increase was matched by the competition). “There have been 21 attempts so far this year — 15 were successful — and that was by early July.”
We may, however, be reaching the point where those increases hit the wall of consumer resistance. During the first half of the year, the Big Six airlines carried 5 million fewer passengers (228 million) than a year earlier, and in June, revenue passenger miles, the standard metric for paying traffic, was down anywhere from 1.5 percent (US Airways) to seven percent (Delta).
Like them or not, surcharges and à la carte fees are here to stay. Among the newest and most annoying: $2 for soft drinks (US Air), $25–$100 for frequent-flier award redemptions (Delta and Northwest) and $15 to check even a single bag. Originally initiated by American in May, first-bag fees are now also being charged by Northwest, United and US Air — although the implementation date varies.
In fact, several airlines have begun stationing additional employees — aka, “the luggage police” — throughout the terminal to “assist” (i.e., charge) passengers trying to carry check-worthy bags on board. Even those who follow the rules should be prepared for long delays and heated discussions at the ticket counter and security.
Even more frustrating, perhaps, is the fact that all these new fees won’t even begin to stem the flow of red ink the airlines are facing. (With crude oil prices hovering at $130 per barrel, the Air Transport Association estimates that 40 percent of the price of an airline ticket now goes to fuel.) And even if the airlines miraculously returned to profitability, the fees will almost certainly remain.
“If you asked me three months ago, I’d say passengers were upset about being nickeled and dimed and quartered,” says Seaney. “Now, the fees have sunk in and people are figuring out ways to get around them when they can.”
Floods in the Midwest, tornadoes in the Plains states and hail and high winds down South — despite steadily improving figures through May, the airlines’ on-time performance hit the skids in June. According to FlightStats.com, less than 71 percent of flights arrived on time during the month, down from nearly 79 percent in May.
And there’s no reason to think things will improve any time soon. The nation’s major airports remain terribly congested — barely half the flights at Newark, LaGuardia and JFK were on time in June — and efforts to cap flights, shift schedules and reconfigure airspace don’t seem to be helping. Last week, the U.S. Government Accountability Office released a report predicting that such efforts “will have a limited effect on reducing delays during summer 2008.” One or two good storms, and we’re looking at 2007 all over again.
High fares, rising fees and more snafus — and there’s no relief in sight. As TIA has noted, millions of people will continue to travel this summer, but fewer of them are taking to the skies. Fuel costs have already pushed six smaller U.S. airlines into bankruptcy since last December — one, Frontier, is still flying — while larger, better-funded airlines are parking planes and cutting unprofitable routes as fast as they can.
“Fifty-nine airports that had commercial service in 2007 don’t have any today,” says David Castelveter, vice president of communications for the Air Transport Association (ATA). “Another 38 have it, but won’t at some time in 2008.”
The most extreme cuts won’t happen until after Labor Day, but travelers are already feeling the pinch and planning for worse to come. “We can afford to travel now,” says Brenda Chaney, “but the question is, What will we give up later because we paid more now? With the uncertainty of the economy, I don’t feel we can take that chance.”
Reinventing the great American road trip
A billion here, a billion there. When you’re talking about the number of miles Americans are driving, it starts to add up — to a lot less. According to the Federal Highway Administration, Americans drove 1.4 billion fewer highway miles in April, a 1.8 percent drop from April 2007. That’s the sixth monthly drop in a row and part of a decline of 30 billion miles over the same six-month period a year earlier. From the price at the pump to long-term travel patterns, the great American road trip may never be the same.
At an average national price of $4.06 per gallon this week, gasoline is actually a nickel cheaper than it was a week ago. The reason, though, has less to do with the recent drop in crude oil prices — such ripple effects typically take four to six weeks to show up at the pump — and more to do with the fact that Americans are making serious efforts to change their driving habits.
Whether the price drop represents a hiccup or a harbinger of things to come, it’s already apparent that U.S. demand for gasoline is dropping. According to David Portalatin, an industry analyst with the The NPD Group, consumers currently purchase an average of 57 gallons of gas per month, down from an historical average of 60 gallons. “It’s not a huge number,” says Portalatin, “but when you extrapolate it to 240 million drivers, it’s a pretty significant amount.”
Like many Americans, David Colmans, a human resources and diversity specialist in Montgomery, Ala., is modifying his travel plans to reflect the new reality. Instead of driving the 450 miles to Disney World as he has in the past, he was planning to load up the family minivan this summer and head for Seagrove Beach on the Florida Panhandle, roughly 150 miles from home. “Generally, Orlando is close enough to drive to,” he says, “but not at these prices.”
And it’s not just the highway miles. Most years, says Colman, the family would go deep-sea fishing a few times and take several day trips to Panama City, 30 miles east, and Destin, 20 miles to the west. “We won’t cut that out completely,” he says, “but we’ll probably cut it in half.”
Tourism boosters and destination marketers are also adapting to the new reality. “Gas is an enormous incentive this year,” says Marti Mayne, spokesperson for BedandBreakfast.com, an online directory of B&Bs. “People are trying to stay within one tank.” To help, the site’s Tanks a Lot promotion highlights $25–$50 rebates on stays at approximately 200 inns: “Innkeepers are finding it’s one of the most effective marketing tools they’ve seen.”
Meanwhile, some vacation destinations are even seeing a positive bump as travelers scale back. In Wisconsin Dells, for example, resort owners report that average stays are inching upward over last year. “Instead of driving to several destinations, people are choosing one with a variety of activities and making a longer trip out of it,” says Romy Snyder, executive director of the Wisconsin Dells Visitor & Convention Bureau.
Virginia, too, is seeing increased interest from travelers hoping to cut down on their gas expenditures. This summer, the state is promoting Park the Car Getaways that tout cities and other destinations where visitors can forgo driving for the length of their stay. According to Tamra Talmadge-Anderson, spokesperson for the Virginia Tourism Corporation, the online promotion has received 75,000 hits in the last six weeks.
“People can ditch the car and spend two or three days on foot visiting restaurants, shops and museums,” she says. “They can save a ton of money — not put it in the gas tank.”