Air fares are rising but traveler numbers keep increasing. At what point will people say enough is enough and wait for air fares to settle?

We all know air fares are going up. It’s a function of too many passengers and not enough seats. We all know how that happened, with the aviation industry underestimating the speed of the recovery and getting caught on the hop. It’s still possible to jag a bargain, particularly if you are flying short haul domestic and not fussed about which airline you fly. But if you are flying further afield and pickier about your carrier, then these days, you are likely to pay considerably more than you once did.

When will passengers say enough is enough regarding fare rises?

But how much is enough? At what price point will travelers put their credit card away and not fly. Airline analytics business OAG surveyed 1,442 passengers using their app in May and came up with some figures. Now, 1,442 people isn’t a huge sample size and if you’ve downloaded their app you are probably already a bit of an airline industry stalker and keen on a plane ride, but let’s take a look at the results with this in mind.

According to OAG, 79% of respondents said a US$50 fare increase wouldn’t make any difference to their travel plans. Increase the fare by $100 and 43% of travelers would go ahead with the trip. Increase the fare by $200 and the proportion of travelers still keen to fly drops to 17%. A $300 fare increase would reduce the number of respondents still willing to fly to just 9%.

Context is everything with air fare rises

Of course, context is everything. If I’m paying $150 to fly five hundred miles on a low-cost carrier, then a $50 fare rise might sting. It’s not a lot of money, but a 33% fare increase seems like an opportunistic sting. If I’m paying $10,000 to fly business class from Los Angeles to Bangkok the long way around, a $1,000 fare increase probably wouldn’t sway the purchase decision. It’s much more money than the low-cost-carrier sting, but as a proportion of the overall fare it is less so (only 10%) and more agreeable to my headspace that is already (apparently) ready to part with $10,000.

“Most travelers are eager to get to their destinations as quickly as possible. Few are willing to wait three to four hours during a layover, even if it means they can save $100-$200 on ticket prices,” says OAG. “More are willing to wait three to four hours to save $300 to $400 on ticket prices. The willingness to wait five hours plus during layovers drops no matter the ticket price.” What OAG didn’t say, and probably should, is what was the baseline ticket price quoted when surveying the respondents. Acceptance (or non-acceptance) of price rises and other travel pains is usually all about percentages of the fare rather than raw dollar values.

People are mostly happy to pay a premium to fly

The survey respondents lived in North America where OAG notes ticket prices jumped 18.6% in April alone (based on Bureau of Labor statistics).

Other than fare rises, what else gets up North American travelers noses and deters travel. 52% of respondents cited scheduling problems like delays and cancelations. 19% of respondents have issues with customer service in the airline industry and 14% mentioned the lack of flight options to where they wanted to go.

The airline industry in the North America and many other parts of the world is pretty messed up right now. Logically, most people would avoid non-essential air travel just to dodge the chaos. But perfectly sane humans are buying expensive flight tickets by the millions to undertake non-essential travel and get caught up in the mess. OAG reckons 300 million North Americans and 1.6 billion people worldwide plan to fly within the next three months. That’s a lot of gluttons for punishment – me included.

Source: Simple Flying

Results from a recent survey conducted by global travel network Virtuoso highlight how some of the world’s most discerning travelers view sustainable tourism.

The results found that while travel rebounds in new and innovative ways, travelers remain ever conscious of their place and impact in the world, with more than 80% of respondents indicating that the pandemic has made them want to travel more responsibly in the future. This figure echoes identical findings from a survey conducted last year, proving that traveling sustainably continues to be a top priority for luxury travelers.

Assessing high-end travelers’ sentiment regarding purposeful travel, Virtuoso’s 2021 sustainability survey found that 78% believed it’s important to choose travel companies that have a strong sustainability policy, moving them to seek out companies committed to Virtuoso’s three pillars of sustainability: protecting the planet, supporting local economies and celebrating cultures.

In addition, 70% agreed that traveling sustainably enhances their vacation experience, and the overwhelming majority of respondents said they would be willing to visit a popular destination during off-peak seasons or opt for an alternative, less-touristed destination to help combat over-tourism.

This eagerness to explore the planet in a way that protects it for future generations has persevered throughout the pandemic, and its influence is present today.

In Virtuoso’s 2022 sustainability survey, affluent consumers reported that cost is less of a factor when planning to implement sustainable travel practices, but transparency is: 75% of travellers are willing to pay more to travel responsibly if they know how the funds are being used.

Travellers also expressed a strong desire for deeper knowledge and assistance with making more informed decisions around sustainable travel, with 40% of respondents saying they would be encouraged to travel more responsibly if they had guidance from a trusted source, such as a professional travel advisor, who could help them determine where to begin.

“The pandemic has led to an interesting phenomenon, taking sustainable travel from afterthought to forethought for travellers who are now searching for more meaning in their lives, their actions and ultimately with their spend,” said Vice-Chair and Sustainability Strategist Jessica Hall Upchurch.

“Travellers want to know that they, and their money, are making a difference. The pandemic disrupted the industry unlike anything before, but it also shifted priorities, resulting in a renewed commitment from travelers to safeguard the planet and each other. This conscious comeback will continue to transform the way we travel, and it reaffirms our belief that travel can be a force for good.”

The 2022 sustainability survey also revealed the ways in which travellers support sustainable tourism and the top destinations / trips associated with sustainable tourism:

Top 5 Ways Travellers Support Sustainable Tourism

1. Reduce food and plastic waste by bringing their own water bottle, carrying reusable bags, etc.
2. Support wildlife conservation
3. Travel during the off-season or to lesser-known destinations
4. Contribute to causes that benefit the destination and community they’re visiting
5. Support travel companies with a strong sustainability policy

Top 5 Trips/Destinations Travellers Associate with or Prioritise for Sustainable Tourism

1. Cultural tours (land-based)
2. River cruising
3. Heritage sites
4. African safaris and ocean cruising (tie)
5. Island destinations

Source: Luxury Travel Magazine

China recently started operations of international flights after a two-year ban due to the COVID-19 pandemic. However, as per the reports, there is no confirmation yet on the resumption of air services to India even after Beijing lifted the visa ban for Indian professionals and their families last month.

Reports state that China has also reduced the quarantine time to 7 days in designated hotels in the process of streamlining procedures for those arriving into the country, which is followed by 3-day isolation at home from the previous 2-day isolation for inbound travellers.

Reportedly, the said policy led to an increase in flight operations connecting China with other countries, especially the United States, along with the number of people travelling out of the country.

China has also made substantial adjustments since the COVID-19 pandemic, as consulates and embassies in 125 countries announced policies to streamline the process for those entering the Chinese mainland.

However, there have been no regular routes between India and China since November 2020, and no flights from both the countries have been notified yet.

As reported earlier, Beijing last month lifted a two-year visa ban for Indian professionals and their families working in various Chinese cities, but their travel to China remained a challenge as no flights between the two countries have started yet.

Meanwhile, China has permitted limited flight services to several countries in the neighbourhood, such as Nepal, Sri Lanka, and Pakistan.

With regard to those Indian professionals and their families who began getting Chinese visas in India to return, they added that they are facing problems as there are no direct flights to China.

Source: Times Travel

Flying to Europe this year might sound as absurd as opting for premium gasoline. With prices this high, is it really the right time to splurge?

“As a result of labor shortages and all these things going on, travel is more expensive than it’s been in a while,” says travel journalist Oneika Raymond. “Flights are really expensive. Accommodation is really expensive. And revenge travel is a thing.”

Although travel prices continue to soar overall due to constrained supply and mounting demand, pockets of affordability remain.

Europe represents one of these pockets, where weakening currency exchange rates against the dollar and tepid demand have left prices relatively unscathed. In fact, flights within the U.S. have become so expensive this year that some international destinations, including many in Europe, offer a relative bargain.

“If you are willing to pay to fly domestically, check out international destinations,” suggests Hayley Berg, lead economist at Hopper, a travel booking app. “Because there is a good chance that there is a flight to somewhere else in the world for about the same price.”

Airfare Is Less Inflated In Europe

Domestic airfare was 30% higher at the end of May 2022 compared with May 2019, according to data from Hopper.

“Airfare this summer within the U.S. will cost $600 to $800,” says Berg. “At those prices you can get to Reykjavik, Iceland, or Dublin, Ireland.”

Indeed, flights from the U.S. to Europe were only up 13% at the end of May 2022 compared with the same period in 2019, according to Hopper. That trend squares with tourist demand, which remains below pre-pandemic levels: About 19% fewer U.S. travelers left for Europe in May 2022 compared with May 2019, before the pandemic, according to data from the International Trade Administration.

Put simply, prices and demand for flights to Europe are increasing, but not as quickly as they are elsewhere.

“Given how high domestic airfare is, you can get more bang for your buck with longer-haul destinations,” explains Berg.

The Dollar Is Strong

Although 2022 may go down as a bear market for everything from stocks to cryptocurrency, the U.S. dollar has gained ground on many foreign currencies. The dollar was 15% stronger against the euro in May 2022 compared with May 2021, according to data from the Federal Reserve.

“Today what we’re seeing is that a dollar can buy more euros than it has been able to essentially since the euro launched,” says Berg.

This means that anything purchased while traveling in countries that use the euro will be at a 15% discount, if currency exchange rates remain stable. U.S. travelers will enjoy this benefit on everything from food and lodging to events and transportation.

Of course, global inflationary pressures continue to drive up prices everywhere, including Europe. Annual consumer prices in Germany were up 7.9% in May, according to the Financial Times, just shy of the 8.6% increase in the U.S. Yet, while prices may remain elevated nearly everywhere, the relative strength of the dollar can help soften the blow.

Public Transportation Can Help You Save

Inflation has hit no aspect of travel more directly and dramatically than the cost of renting and operating a vehicle. Rental cars prices were up a budget-busting 69% in May 2022 compared with May 2019, according to U.S. Bureau of Labor Statistics data. And everybody knows how high gasoline prices have jumped.

These factors should make this the summer of public transportation for money-conscious travelers. Yet the U.S. offers few tourist destinations that can be explored by train.

Not so in Europe, where most popular cities offer safe, affordable and dependable transit. Cities such as Amsterdam, London and Copenhagen can be explored for only a few euros, which is equivalent to only a few U.S. dollars with favorable exchange rates.

Visiting national parks in the U.S. made sense in 2020 and 2021 for a host of reasons. But saving money in 2022 means skipping cars outright when possible.

Off The Beaten Path?

We are in strange times indeed when traveling to Europe represents an off-the-beaten-path, budget-friendly choice. Yet the facts speak for themselves. Airfare to Europe is rising less quickly than domestic tickets, and fewer travelers are visiting the continent. The dollar is strong, and the U.S. has dropped its testing requirement for arriving travelers, which made leaving the country a pain.

All this has combined to make Europe a good choice for travelers in an upside-down year. Riding the rails in Zurich could prove cheaper than renting a car in Cleveland.

Source: AP

Dubai hotels will continue to lead the ongoing robust recovery in the Middle East hotel sector in 2022 with occupancy levels as high as 77 per cent.

Hotels in Dubai Creek/Festival City and Dubai Marina/JBR areas will be the busiest with the highest occupancy rates, according to the Mena Hotel Forecast by Colliers.

“The impact of Expo 2020 has had a positive impact on all markets in the UAE, while the FIFA World Cup Qatar 2022 is expected to result in overspill demand to the key transit hubs in Dubai and Abu Dhabi,” Colliers said in its latest report.

However, rising instability in key CIS source markets is expected to suppress demand, with the largest impacts expected in Dubai and Ras Al Khaimah, it said.

“Given the diversity of source markets for the UAE, additional hotel demand may be induced from alternative markets at a lower price positioning,” Colliers said in its report.

In Dubai, across almost 800 hotels, occupancy rates in Dubai have averaged 76 per cent throughout the first half of 2022. The achievement makes Dubai the world leader for hotel occupancies, head of New York, London, and Paris, according to the recent tourism data revealed by Dubai’s Department of Economy and Tourism (DET).

Dubai has welcomed 6.17 million international overnight visitors up to May 2022, a 197 per cent YoY increase. The 76 per cent occupancy figure was maintained from January to April 2022.

Hotels in Abu Dhabi, Sharjah, Fujairah and Ras Al Khaimah also have recorded above 60 per cent occupancy

Dubai is building on the massive momentum generated by the hugely successful Expo 2020 to drive growth across all its tourism pillars from cultural to culinary experiences. “As we look ahead to the remainder of 2022 and beyond, we will harness the key elements that have ensured the industry’s steady growth year after year since we reopened to international visitors in 2020 – providing an unparalleled diverse destination offering that offers unique value and memorable experiences for our guests,” said Helal Saeed Almarri, director general of DET.

Christopher Lund, the executive director, Colliers, said most markets would have improved on their year-on-year performance in the second half of 2022. “However, increased geopolitical tension, a rising price of oil, and a significant increase in inflation have affected key inbound source markets for the region resulting in a slower than expected recovery. When factored with an increase in outbound travel from the region, this has reduced the rate of recovery in domestically oriented markets.”

“While ongoing monitoring of the Covid-19 pandemic by key touristic stakeholders continues to influence how markets recover, consumer confidence will be the principal determiner of growth. A transparent and consistent approach to the easing of Covid-19 restrictions to support further recovery and growth remains a key factor in improvement,” said Lund.

In the Middle East, the sharpest jump in occupancy was demonstrated by hotels in Makkah at 106 per cent and Madinah at 80 per cent due to the restart of the pilgrimage travel while negative occupancy growth was recorded by hotels in Sharm El-Shaikh and Alexandria, at 12 per cent and 7.0 per cent respectively.

“The Riyadh Season and growing consumer confidence has benefitted both the Riyadh and Jeddah markets. While positive indications on the return of pilgrim demand has improved the outlook for the Makkah and Madinah markets. The rising price of oil has historically led to increased corporate demand in Al Khobar/Dammam, however, an increase in outbound travel may reduce this impact,” said the report.

Cairo has maintained its rate of growth, however, leisure-oriented markets have experienced a marked reduction of demand stemming from increased competition in the region as well as travel uncertainty from the key CIS markets. The exception here is the Hurghada market which has maintained its levels of demand.

Doha has experienced a slight decrease in occupancy over H1 2022 compared to the previous year. However, Fifa World Cup Qatar 2022 is expected to result in super-normal levels of demand for its duration in the final quarter of the year.

Source: Khaleej Times

Emirates and Air Canada have announced the signing of a strategic partnership agreement that will create more options for customers when travelling on the carriers’ networks.

Emirates and Air Canada intend to establish a codeshare relationship later in 2022 to offer enhanced consumer travel choices for Air Canada customers to travel to the United Arab Emirates and to destinations beyond Dubai, and vice versa.

Customers will have opportunities to book connecting travel between both airlines’ networks with the ease of a single ticket, seamless connectivity at the carriers’ respective global hubs and baggage transfers to their final destinations.

President of Emirates Airline, Sir Tim Clark, described the pact as a significant partnership that would enable customers’ access to more destinations in Canada and the Americas, via the Toronto and U.S. gateways.

“It also opens up many new route combinations for travellers across Emirates’ and Air Canada’s extensive networks in the Americas, the Middle East, Africa and Asia.

“We are pleased to partner with Air Canada, one of North America’s most established airlines and Canada’s flag carrier and we look forward to jointly progressing in various areas to provide even better customer flight choices and experiences.”

President and CEO of Air Canada, Michael Rousseau, added that they were very pleased to form a strategic partnership with Emirates, a highly respected flag carrier of the United Arab Emirates with a hub in the vibrant city of Dubai.

“This strategic agreement will create network synergies, and Air Canada customers will have additional, convenient options when travelling between Canada and the United Arab Emirates as well as destinations beyond Dubai. We look forward to introducing Air Canada codeshare service on key Emirates flights, as well as adding the EK code on select Air Canada flights, and welcoming Emirates customers on our services later this year.”

To further enhance the customer experience, the carriers will also establish reciprocal frequent flyer benefits and reciprocal lounge access for qualifying customers. Further details of the partnership and specific codeshare routes will be announced when finalised and will be subject to regulatory approvals and final documentation.

Source: The Guardian