Anyway you cut it, air travel is going to become a very unpleasant experience after the Labor Day holiday. Airlines are about to experience the industry’s first major contraction — ever.
How much of a contraction? The domestic airlines have announced capacity cuts of approximately 10 percent across the domestic air transport system. (Hardest-hit will be cities like Orlando, as my colleague Janice Hough pointed out.)
Industry-wide, we’re likely to see reductions of approximately 10,000 employees within the American airline industry. This is based on the direct result of airline cutbacks either announced or in my estimation that have to be announced. I project that the total job losses within the travel industry could exceed 150,000 by mid-2009.
Conventional wisdom says the airline business is able to move assets around from market to market. That’s not true. The business is a largely fixed-cost, highly structured and inflexible mass.
Hotels are worse. Unlike a plane, which can have flights merged, hotels can’t move. Already, the demand and forward bookings after September are just way off. This is not just anecdotal.
Airline planners, yield managers in hospitality and travel agencies around the globe are seeing a drop off in forward bookings that has them worried. And even car rentals are suffering. They can’t shift cars on the lot and the auto industry can’t use the car rental market to offload their surplus output. Maybe that’s why car sales are now at their lowest for 16 years. Need I go on?
So what is the likely behavior and how can you ameliorate the impact? What can you do to make your life better? Can you take advantage of the situation?
We are going to see some behavior we have not seen in a long time. And we are going to experience difficulties which will ultimately undermine consumer confidence. The price for short-term benefit is a long-term behavior change and more power to the consumer.
Here are my tips for surviving the coming travel crash.
1. For peak periods, book early. Inventory is tight for airlines. Book your holiday travel as soon as possible. Remember, all airlines can accept bookings up to 330 days out.
2. Don’t jump on that hotel deal straight away unless you have an airline ticket to go with it. In Las Vegas, a room that used to be priced at $290 is currently going for $79 at the MGM Grand. But getting to Vegas is costly. Remember to consider the total cost of the trip
3. If you don’t have to travel, don’t. This is the travel supplier’s worst nightmare but for the short term it will become a self fulfilling prophesy.
4. If you must travel, be better prepared. Sign up for the fares site and meta search companies such as FareCompare, Yapta and Microsoft’s Farecast. You must be a better consumer. A stupid consumer will pay extra.
5. Make sure that you have formal confirmation from the airlines and hotel. If you are bumped, your chance for getting to your destination on the “next flight” is going to be pretty hard. Also the only person to rely on is yourself. The suppliers are going to be cutting back on customer service, so don’t assume you will get any joy from them!
6. Choose off peak times to travel. However, being opportunistic is going to be hard. Look for a lot of last-minute sales.
7. That trip of a life time you wanted to take… take it now if you can afford it.
8.International trips will be cheaper than before but watch out for the surcharges they will bite you badly.
9. Pack light going and coming.
10. Be patient.
