Rising Airfares Stifle Travel Recovery

Consumer Travel Rebound Is Being Slowed Down By High Airfares

The consumer travel rebound is being slowed down by high airfares, despite an increase in corporate travel, so says Orbitz Worldwide President and CEO Barney Hartford.

In an interview with CNBC on Thursday, Hartford said, "We're seeing a really good recovery, especially in corporate travel, but generally, the travel industry is doing a lot better."

Hartford quickly added that overall consumer travel may be slowed down by persistently high airfares.

Up to a 17 percent rise in average ticket price was seen in international routes, while it is up 10 percent for U.S. travel.

"We are seeing ... a moderation in the increases in air tickets that we were seeing in perhaps May and June, where we saw some really stronger increases in air tickets," Harford explained.

"We're hopeful that we'll see an increase in capacity in the airline sector, which will drive some moderation in (the price of) airline tickets,” he added.

The recession has pumelled the airline industry with initially record-setting fuel charges, followed by a dwindling demand for air travel, and airlines are continuously looking to cut back costs albeit with slow action.

Travelers may still get some good deals in spite of the high airfares, citing Caribbean travel as offering value ticket prices, which have actually remained stagnant from the level a year ago.

Business travel is on the upswing in major U.S. cities and this represents the biggest growth area of air travel right now.

Orbitz reported better-than-expected earnings for the second quarter, and Thursday’s trading of its shares were higher. Those numbers reflected a rise of 17 percent of the value of booking from year ago levels.

Posted by James Fried on Friday August 06 2010, 11:01 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0