Airline travel predictions for 2013 mixed
BY D.R. STEWART World Staff Writer
Friday, January 11, 2013
1/11/13 at 7:03 AM
In 2013, the U.S. economy will continue to improve, business travel will increase and leisure travel will be flat to down slightly compared with a year ago, travel industry executives said.
But in the midst of a partly cloudy picture for business and leisure travelers, there will be outstanding bargains for those who make long-range plans and have the flexibility to travel on off-peak days and times, industry veterans said.
Both business and leisure travelers are looking to the economy as an advisory on business and leisure travel spending.
"Just four years ago, the U.S. economy was about to plunge into the worst recession since the Great Depression, financial markets were in disarray and households started saving for a rainy day in the midst of a financial hurricane," Standard & Poor's Rating Services said in a recent report, "U.S. Economic Forecast: Back to the Future."
"But with each year, the economy continued to heal. Now, we have some solid reasons to feel optimistic. It looks like the economy could finally be in a self-sustaining recovery."
S&P forecasts 2.3 percent Gross Domestic Product growth this year, up from 2.1 percent in 2012 and stronger than the 1.8 percent the ratings service predicted months ago, officials said.
Michael W. McCormick, executive director and chief operating officer of the Global Business Travel Association, said the last months of 2012 found U.S. business travel spending to have grown 1.6 percent, to $254.9 billion, compared with a year earlier, on a 1.9 percent decline in trip volume, to 436.5 million person-trips. The spending increase was mainly due to rising travel costs, he said.
"Even with an agreement to avert the fiscal cliff in the near term, there are still many issues that need to be addressed; however, companies should now have somewhat greater confidence in their spending decisions," McCormick said. "While companies will approach the first half of the year with some caution, pent-up demand to get back on the road should hopefully fuel accelerating growth in business travel spending through the end of 2013."
International outbound business travel, which previously has been a strong driver of overall business travel spending growth, was stagnant in 2012, growing just 0.7 percent as problems in the eurozone affected trade and business confidence, causing a ripple effect that reached the shores of the U.S. and Asia, the GBTA said.
"Although the eurozone remains troubled, increasing industrial production and retail sales in China signal an improving economy for 2013," the GBTA said in its latest forecast, issued Tuesday. "Among other factors, a stronger China will improve U.S. export growth and help act as an engine for international outbound business travel. As a result, GBTA expects to see a 5.9 percent rise in international outbound spending for the year."
Group business travel is expected to increase 5.2 percent in 2013, up from 1.3 percent in 2012, McCormick said.
"Businesses will be looking to capitalize on growth opportunities abroad and spend more on in-person meetings and events, as well," McCormick said. "By nature, meetings are longer-lead investments that require greater confidence in the future."
Alex Eaton, president of World Travel Service in Tulsa, has seen some of the optimism among local businesses.
"In the first five business days of 2013, booking volume is up 15 percent from the same five days of 2012," Eaton said.
"I don't think it will hold up. The economy continues to grow slowly, businesses are cautious and want to control spending. This year we are looking at single-digit growth in corporate airline ticket sales. Last year, it was up 12 percent. I think it will be more like 6 percent this year."
Travel costs will be higher and airline seating capacity lower in the leisure travel market in 2013, industry veterans said.
A report issued this week by Colorado-based Boyd Group International predicts a 1.5 percent to 2 percent drop in airline passenger traffic this year.
"In the first quarter, airlines are scheduling 2 percent less seats, which means fewer people getting on airplanes," said Michael Boyd, chairman of Boyd Group International. "Airlines aren't chasing volume anymore. There are only 10 major full-schedule airline systems left, and each has its own subjective strategy in regard to where and if it adds capacity."
Despite higher prices, travel industry professionals said there is pent-up demand among leisure travelers.
A survey by Travel Leaders Group of 1,045 U.S.-based travel agency owners, managers and travel agents found 92 percent of the travel professionals expect that their clients will spend the same or more on travel in 2013, compared with 2012. More than 82 percent of the agents indicated bookings are on a par or greater than they were a year ago, the survey found.
The survey also found that half of the top 10 international destinations are European.
"Already, 2013 is shaping up to be a banner year for European travel," said Barry Liben, CEO of Travel Leaders Group. "While Caribbean cruises are still the No. 1 international destination for our travelers, our booking data shows a marked increase in American travelers headed across the Atlantic in the coming year."
Nancy Winn, a travel agent for Travel Leaders/Spears Travel in Tulsa, said the forecasts are accurate of reduced seating capacity, higher prices and pent-up demand.
"Availability is tough out of Tulsa," Winn said. "It's hard to get the lowest prices because there are only four airlines out of Tulsa."
The four airlines serving Tulsa International Airport are American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
On Wednesday, Winn booked a roundtrip flight in June from Tulsa to Cancun, Mexico.
"The prices last year were in the $500-to-$600 range, and there was more availability," Winn said. "This year, it's $700. People are a little more price-conscious. They're not sure about the economy, new taxes. People are playing wait-and-see.
"If you can go when people aren't traveling, there are deals out there. Flying to Australia in our wintertime (their summer), prices are going to be higher. If you're going to get good fares, you have to do long-range planning and you have to be flexible."
Eaton, president of World Travel, said the economic problems in the eurozone are persuading him to consider a European vacation this year.
"Greece is super-cheap. So is Spain," Eaton said. "It's cheap to be there. And airfares are going down, and once you get there, there are lots of deals to be found."
2013 U.S. business travel forecast, compared with 2012
- 431.8 million person-trips, 1.1 percent decline
- $266.7 billion in travel spending, 4.6 percent increase
- International outbound travel spending, up 5.9 percent
- Group travel spending, 5.2 percent increase
Source: Global Business Travel Association
2013 top international leisure travel destinations
1. Caribbean cruise
2. Cancun, Mexico
3. Mediterranean cruise
4. Rome, Italy
5. London, England
Source: Travel Leaders Group
2013 top domestic leisure travel destinations
1. Orlando, Fla.
2. Las Vegas, Nev.
3. (tie) Alaska cruise
3. (tie) Maui, Hawaii
5. New York City
Source: Travel Leaders Group
Original Print Headline: Travel ups, downs
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
Associated Images:
A business traveler walks to the terminal after landing at City Airport in London. Problems in the eurozone hurt business confidence last year, causing a global ripple effect in the travel industry, analysts say. Bloomberg file
A British Airways jet lands at City Airport in London. A report issued this week by Boyd Group International predicts a 1.5 percent to 2 percent drop in airline passenger traffic this year. Bloomberg file
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