March 31 2011 by Chris McGinnis
Airfare: There's no doubting that airfares are on the rise this year. Depending on whom you ask, average fares are up 10% to 20% over last year. This is due to three factors: rising demand, higher fuel costs, and a reduction in the number of seats flying.
- Demand is up because the economy is improving. Business travelers are eager to get back out on the road and face-to-face with clients and colleagues they haven't seen in a while. Among leisure travelers, there's a lot of pent up demand for vacations getting released now that they are feeling more confident.
- Fuel costs are up due to uncertainty in the Middle East and rising demand for oil as economies around the world recover from the recent global recession.
- Frightened by the sudden rise in their fuel costs airlines have recently announced that they are cutting back expansion plans, and reducing capacity nearly across the board. When airlines reduce supply as consumers increase demand, basic economics means that prices are going to rise.
Buy now or wait? I suggest buying your airline tickets for spring and early summer travel now. Despite major events in Japan and throughout the Middle East, the global economy seems to be on an upward track, which means higher fares (see above). Airlines have increased fares almost ten times so far this year. Fuel surcharges are popping up everywhere. Shop around, and when you see a fare that feels right, book it, and don't look back.
Airline Fees. Everyone loves piling on the airlines about the raft of "new fees" they are piling on customers. The only fees that really irritate me are: the $25 fee for the first checked bag and the $150 fee for changing a ticket, and the $25 fee for booking tickets using a human agent via phone. But most of those other "new fees" we are hearing about lately about are not fees at all. They are simply charges for new OPTIONAL products. For example, I'm happy to pay $13 for in-flight Internet access on a cross-country flight. I'll gladly pay $8 for a clean pillow or blanket that no one else has used. On full flights, it's sometimes worth it to pay for early boarding. For longer flights, I don't mind paying more for a seat with more legroom. I'm happy to pay for a healthy fresh in-flight snack than the awful plastic pressed chicken and rice we used to get "for free."
Hotels: Hotel prices are not expected to increase as much as airline fares. . .but they are on the increase for the first time in several years. This is especially true in cities where rising demand from business travelers and leisure travelers is occurring, so expect to be shocked at hotel prices in big convention cities along the coasts such as New York, San Francisco or Boston, especially if there's a large convention in town. Even long suffering Las Vegas has experienced recent gains in average hotel rate. Travelers will still find hotel deals in the heartland however-- rates in cities like Chicago, Atlanta or Denver are still relatively flat. The best hotel deal is not always the one with the lowest rate-- check on whether extras like parking, internet or breakfast are included or not (like they always are at Best Western!)
Gasoline Prices: Americans will be paying close to $4 per gallon this summer, but I don't think it's going to keep people home. They'll still take their driving vacations and business trips, but will look for other ways to cut back. They'll take shorter trips, stay at less expensive hotels, dine out less often. But they are still going to go. I think we'll see the emergence of special deals designed to assuage fear of high gas prices-- during previous peaks in gas prices, hotels and resorts have made offers to pay for a tank of gas, for example. If gas prices remain stubbornly high, travelers should be on the lookout for these types of promos.
Timing and Flexibility: Did you know that there are certain days in July and August that now outrank Thanksgiving as the busiest air travel days of the year? With demand like that, you can always expect to pay top dollar during the peak season, which generally runs late June through late August. If you have the flexibility to book summer business or vacation trips in early June, or late August, you may still find a few deals.
Shoulder Season: Prices are even lower if you can travel during what's known in the travel industry as "shoulder season." Spring shoulder season runs from the week after Easter (April 24) until the week before Memorial Day weekend (May 28-30). Fall shoulder season starts in mid September and runs until early November. Travelers will find advance booking prices lower during these periods. Shoulder season is also a good time for those with flexible schedules to consult online booking sites for last minute deals, which are much more prevalent when demand is weak.