“I don’t think people realize what’s coming,” Michael Boyd, president of the airline forecaster Boyd Group International, told New York Times On the Road columnist Joe Sharkey earlier this year. (Read the full column at convn.org/nyt-airlines.) “Airlines are going to do okay, but doing okay means they’re going to be dropping a lot of places they now fly. Air travel is going to get accessed by fewer and fewer people,” as airlines continue to reduce service to many markets to cut costs. “This is a mixed metaphor,” Boyd said, “but it’s going to be a sea change in air- travel patterns.”
As Sharkey went on to explain in his column, for more than a year, “most airlines have been reducing capacity in the domestic air travel system while concentrating on the major routes that provide the most revenue and feed their international routes.” Sharkey cited industry trade group Airlines for America stats: Domestic airlines earned $390 million last year, and $2.7 billion in 2010, after a decade in which they collectively lost $53 billion.
The trade group, Sharkey wrote, “has been calling on the federal government for help to reduce aviation taxes and regulations, assist the industry in facing more aggressive global competition, curb fuel prices and volatility, and spend more money on improving the national air trafic control system. ... And argued that without help, ‘domestic service levels will suffer,’ especially at smaller cities and rural communities.”
› Prices in most areas of travel spend are expected to grow modestly around the globe next year, with the most sig- nificant inflation expected throughout the Asia Pacific and Latin America regions. “Price increases in 2013,” said Senior Vice President of Global Product Marketing and CWT Solutions Group Nick Vournakis, “will begin to level off in most regions throughout the world compared to what travel buy- ers experienced in 2012, as booming economies like Asia Pacific’s begin to normalize, and as uncertainty remains in Europe. While slightly higher prices will be the reality again next year as demand for travel outpaces supply in most places, our forecast demonstrates there is still plenty travel buyers can do to watch costs and take care of travelers through other measures, including re- examining how they influence traveler behavior.” › Airfares will likely climb 2.5 percent during 2013, as carriers have been diligent in implementing tight capacity controls that continue to yield high load factors despite economic concerns. › High-speed rail rates will likely increase 4.3 percent during 2013 as this mode of transportation continues to offer a competitive alternative to air travel in key markets. Notably, increases of up to 9 percent are
expected in premium-class cabins, where corporate travelers typically ride to access free wireless Internet and other amenities. › The Asia Pacific region has experi- enced strong economic growth over the past several years, which quickly drove prices upward. Growth in 2013 is expected to stabilize, which likely will lead to modest price increases, although specific results vary widely by country. › The Latin America region continues to experience overall economic growth, though significant disparities continue to exist that will create varied travel pricing by country next year. The newly formed LATAM Airlines, which is now the world’s second-largest airline by market value, will embark on its first full year of operation in 2013, which may result in improved routes and frequencies to, from, and within the region. › While the economies of the United States and Canada are experiencing slow and steady improvement, there is no major growth expected for the fore- seeable future, which will help contain travel price increases in 2013 for most categories of spend.