Airfares in Asia are increasing, but in the US, the price of flights and hotels seem to be going down. — Pixabay
Travellers who sought vengeance after the pandemic halted plans for nearly two years have already rescheduled and gone on those trips, but now are looking to venture out to their next destination, according to travel experts.
After two years of travellers making up for lost time during the pandemic, leisure travel in the United States has finally reached a “new normal” and travellers are looking to head to new places. The days of revenge travel, or travelling because lockdowns and pandemic restrictions cancelled plans back in 2020, are over – at least that’s what travel experts say.
In turn, travellers in the US will see airfares that look similar or even less than what they paid in 2019.
Workplace flexibility enables leisure travel, thus decreasing revenge travel and the ongoing pent-up demand. He said there’s still a high desire to head out and experience a new place, said Matt Soderberg, US airline practice leader at Deloitte.
“It’s not just, ‘Hey, I want to go book a trip to a hotel’,” he said. “They’re also looking for excursions and experiences while on that trip.”
In 2021, half of summer travellers were looking to “escape after lockdowns”, according to Deloitte’s latest travel industry outlook. That continued into 2022 and early 2023, but declined by the 2023 holiday season, as 11% of people said they were making up trips.
Despite this, travel remains hotter than ever looking ahead into the year.
Hayley Berg, senior economist at the US travel app Hopper, said airfares will look a lot like what was available before the pandemic. Internationally, in regions where capacity has come back fully, like Europe, Mexico and Central America, prices will stay the same until there are significant changes. Those changes could be pre-pandemic changes that airlines monitored, increased competition, lower fuel costs, new entrants to the market or an airline expanding service.
“For Europe, for example, depending on where you’re going, airfares are a little bit elevated in most of the major cities like London, Paris, Rome, Athens ... you’ll see airfares that are probably still above 2019 levels, but far down from those incredible highs that we had seen the last couple of years,” Berg said.
“Asia remains the exception... Those are routes – Trans-Pacific – that are still recovering capacity in parts of Asia, so prices remain very inflated there compared to pre-pandemic.”
Demand for international travel remains high, Berg said. Last year, travellers flocked to destinations all over the world, despite higher airfares and hospitality expenses. According to the Bureau of Transportation Statistics, the national average for domestic airfare was US$367.79 (RM1,724.40) in the third quarter of last year. For that same quarter of 2019, the average was US$345.09 (RM1,67.95).
“Demand remains strong, and we have seen robust bookings to start the year, as travel trends have begun to normalise across entities (in the US),” said Robert Isom, CEO of American Airlines in the air carrier’s latest earnings call.
In 2023, the airline and its regional partners flew almost two million flights, with an average load factor of 83.5%, producing a historic “best-ever” fourth quarter and full-year completion factor. The company also reported the lowest number of cancellations annually since the merger with US Airways in 2013.
Southwest Airlines CEO Bob Jordan shared that same sentiment in the US air carrier’s latest earnings call, stating the air carrier is pleased with the “core demand” for its product.
“We saw close-in performance strengthen in November and December for both leisure and corporate travel,” Jordan told investors. “This led fourth quarter 2023 to be yet another record at just over US$6.8bil (RM31.9bil) in operating revenue, and we are seeing that strength continue into 2024.”
On the flip side, most employers have dramatically changed post-pandemic workspaces with remote and hybrid offices here to say, according to Deloitte. Soderberg called it the “laptop luggers” that will take work with them for these vacations or other excursions during the year. According to a report from Gallup, in 2019, 60% of remote-capable employees spent their week working in person. That number fell to 20% in 2023.
All the while, corporate travel continues to rebound, but gains are decelerating, Deloitte reported.
However, US corporate travel spending is likely to surpass pre-pandemic levels within the next year. According to the Global Business Travel Association’s Business Travel Index Outlook report released last summer, spending will speed up to US$1.8 trillion (RM8.44 trillion) by 2027.
American Airlines remains “very encouraged” by business travel, Isom told investors. Domestic revenues from business travel ended the fourth quarter at 90% of 2019 levels, the airline reported.
In March, “Spring Break” will be a focal point for air carriers in the US. According to Hopper, 90% of those travelling this spring say price and affordability are top of mind. Berg said 83% of travellers who are taking a spring break trip plan to fly to their destination.
Soderberg said this year will depend on “how economics play out” – if travellers can even afford to make big trips.
Domestic travel is back to pre-pandemic levels in the US, and slightly below in some cases.
“I do think there’s a bit of a new normal and I think the data is starting to show what that new normal will look like,” Soderberg said. – Tribune News Service
