Before we delve into the gloom, here’s a little snippet from the sun. Not everyone in the travel sector is convinced that inflated crude oil prices, which hit $130 a barrel this week, up from $64 a barrel a year ago, will hit the entire industry just as hard. Airlines, still in the early stages of recovering from a COVID punch in the gut, may not raise prices as diligently as oil companies. But the advice for travelers considering a summer vacation is to book sooner rather than later.
Let’s start with the worst of it, which is where you’ll feel the most vacation in your wallet. The contradictory increases consumers see every day at the gas pump are not expected to diminish in the coming months. According to forecasts released by Boston-based GasBuddy Monday, prices will continue to rise through the spring and summer, peaking at $4.50 a gallon nationally by August, before finally dropping below $4 a gallon in November. In California, that price can go up to $6 a gallon. On Thursday, the average gallon of gas in Massachusetts was $4.35.
“It’s a painful situation and it won’t improve any time soon,” said Patrick de Haan, head of petroleum analysis at GasBuddy, an app designed to help consumers find low gas prices. “The high prices are likely to persist not for days or weeks, as they did in 2008, but for months.”
He said Gasbody expects national average prices this year to reach an all-time high.
If you feel bad about filling your car’s fuel tank, consider airplanes. A Boeing 737 requires 6,875 gallons of jet fuel. Although fuel accounts for 15 to 20 percent of an airline’s operating costs, airline prices are not expected to jump at the same rate as gas prices. Of course this depends on who you ask.
“Airlines tend to buy their fuel several weeks or months in advance,” said Scott Keys, who monitors airfares on his website Scott’s Cheap Flights, in a practice called hedging. “It varies from airline to airline. If the price of oil goes up one day, and then goes back down a few weeks later, we are unlikely to see a price hike.”
He added that competition between airlines is also likely to prevent significant price increases in the near future. Although it doesn’t sound any alarms, Keyes advised that if you’re planning a trip this summer, now is probably a good time to buy your ticket. There is a better chance that prices will go up rather than down.
“If the price of oil stays where it is now, around $125 a barrel, for a few months, I would expect to see prices go up about 10 to 15 percent,” he said.
Umang Gupta, managing director of Alton Aviation Consulting, said plane prices are now lower than they were in 2019. Until business flights resume, he said airlines will continue to attract leisure travelers at lower ticket prices. Raising prices may alienate those price-sensitive vacationers. The last thing airlines want to see in a post-Delta, post-Omicron world is more empty seats.
“They will undoubtedly try to increase ticket prices to pass on some additional costs,” Gupta said. But it remains to be seen if customers are willing to accommodate it. This is unlikely to happen before summer as there are still more seats than demand and fierce competition for customers.”
On the other end of the spectrum, Linus Benjamin Bauer of Bauer Aviation Advisory sees his fuel tank is half empty. He expects the price of domestic flights to rise 6 percent per month through August, leaving travelers 36 percent higher prices than they are paying now. Fares are expected to rise 24 percent for international flights by August.
Bauer said he came up with the numbers based on normal seasonal increases (as a rule, prices increase during the summer), as well as higher cost of jet fuel, easing of entry requirements and reopening of borders, pent-up demand for travel, and returns. for personal work.
“Another reason for the increase in airfares is that airlines are finally looking to turn a profit after two years of losses,” Bauer said.
It is not known for airlines this summer to fly to Europe. Two studies published last week found that American tourists are anxious about traveling to Europe during the Russian invasion. One study, from MMGY Travel Intelligence, reported that 47 percent of travelers would like to wait and see how the situation in Ukraine develops before making plans to visit Europe.
Reluctance to travel to Europe is reflected in flight searches. Cambridge-based booking app Huber found that searches for European flights were down nearly 10% from expectations, while searches for other regions increased.
Meanwhile, the high cost of crude oil is another blow to the beleaguered cruise industry. Still plagued by viral videos of people stranded on ships in the early days of the pandemic and stories of passengers quarantined in sub-standard conditions during the Omicron surge, cruise lines have slashed fares and piled on extras, like free internet and free cruises and open bars.
They are still working on winning back customers, and they are not going to do so by raising prices. As a result, cruises may become a consumer-friendly way to vacation in 2022.
“When fuel prices go up, cruise lines take a double whammy,” said Patrick Scholes, director of housing and leisure equality research at TruistFinancial.
“Fuel is about 20 percent of their costs, and that’s definitely hurting their bottom line,” he said. Moreover, we usually see some customers pull back when fuel prices go up. Customers on group market cruises – think of those big Caribbean cruises out of Miami – will feel some impact on their discretionary income and may not book. “
When fuel prices have skyrocketed in the past, cruise lines have charged an additional $10 per day fuel fee for tickets. That’s unlikely to happen while some travelers are still fickle about getting back on a ship, Scholes said.
“It’s tough,” he said, “but the cruise industry doesn’t seem to be collapsing.”
But thoughts of summer travel shouldn’t all be as gloomy as tossing a mint ice cream cone in the sand, so Warren Gavirian, dean of the Office of International Education at Endicott College, offered one positive thought about the state of summer travel.
“Anyone traveling this summer to Europe will be affected by the possibility of higher airfares, but they will be met at a favorable exchange rate with a stronger dollar against the euro,” Al-Jafrian said. “In short, Europe may be less expensive than in past years as a result.”
There is a silver lining to this day.
Christopher Muther can be reached at [email protected]. Follow him on Twitter Tweet embed And Instagram chris_mother.
