More Americans pay up to get out

by Tom Johansmeyer on

The outbound non-stop air passenger market grew 6 percent from March 2009 to March 2010, reflecting a 3 percent gain for the first quarter year-over-year. An estimated 3.3 million people hopped flights from the United States in March this year, according to the U.S. Department of Commerce, with the total reaching 8.6 million for the first three months.

Air travel to all international markets ticked higher from March to March, except Mexico, which was flat. The Caribbean, Asia, Canada, the Middle East, Oceania and Africa posted double-digit gains. For the first quarter, outbound passenger traffic from the United States grew in five of the eight international markets – Oceana, the Middle East and Africa showed double-digit gain.

More and more people are flying, and the trend is picking up steam, as evidenced by the fact that the March growth rate was higher than that for the first quarter.

And, we’re spending more money on these flights. U.S. travelers on foreign carriers spent $2.3 billion in March 2010, up 8 percent from March 2009.

Airlines do one thing ahead of schedule: profits

by Tom Johansmeyer on

It seems as though flight times aren’t the only things being padded. The original estimate by the International Air Transport Association that the global airline industry wouldn’t be profitable for three years following the financial crisis gave a little bit of elbow room – something you won’t find on the planes themselves – as indicated by the recent announcement of a predicted aggregate profit of at least $2.5 billion. Back in April, IATA forecasted a $2.8 billion loss for the year.

Demand for seats is on the rise, as people just don’t want to stay home any more. Notes, Giovanni Bisignani, director general of IATA, according to a report in USA Today, “The global economy is recovering from the depths of the financial crisis much more quickly than could have been anticipated.”

In 2009, the global airline industry suffered an $81 billion loss of revenue – a drop of 14.3 percent from 2008. While that did make seats a bit cheaper, it also led to the slashing of routes and what few amenities were left … not to mention all those additional fees. This year, IATA expects revenues to be up $62 billion relative to 2009, but that still leaves a lot of ground for the airlines to make up. While $2.5 billion sounds like a lot of cash, it only amounts to 0.5 percent of total industry revenue, according to Bisignani.

The industry remains “fragile,” he adds, with a slow economic recovery, vulnerability to Icelandic ashes and other disruptions, Europe’s debt crisis and oil prices threatening what gains have been made.

Luxury air travel not taking off

by Tom Johansmeyer on

While other areas in the travel industry are talking about a recovery, luxury travel remains in rough shape. In fact, it’s only on long-haul flights that the big spenders are even asking for upgrades, let alone chartering flights or firing up their own planes. According to Peter Yesawich, CEO of travel marketing firm Ypartnership, “Luxury air travel has essentially been grounded.”

Meanwhile, the airlines are struggling for ways to restore the revenue they used to be able to pull in from its top passengers. Notes Yesawich, “It’s said that real profit in any flight is front of plane. The rest covers the overhead.”

While Delta and British Airways are playing with in-flight amenities for first class passengers, such as showers, it doesn’t compare to the relatively blissful conditions offered on the likes of Eos, which no longer exists. People with private jets are buying airline tickets more often, it seems, though fractional jet ownership remains fairly popular among those with means to access it.

Despite the shift in conditions, one thing remains true, according to Mike Weingart of Travel Leaders: “The super rich fly anyway they want.”

Recession reveals Baby Boomer travel limits

by Tom Johansmeyer on

When I was back in the corporate strategy world, all the talk was about the Baby Boomers. That generation had the bucks – and the inclination – to do whatever it wanted. And, it was ready to follow through … to the point where consumer product manufacturers and hospitality companies were ready to cater to this large generation’s every whim. Well, the latest research from travel industry-watcher PhoCusWright suggests that the recession beat the Boomers down in 2009.

Nobody thought 2009 would be a great year for the travel industry … according to PhoCusWright (and everyone else). Leisure travel feel 11 percent year over year, which wasn’t exactly shocking. What is interesting is that the Baby Boomers backed off a little earlier than other generations, due largely to the fact that they are on the brink of retirement. Every dollar, of course, needs to be considered against the “rest of life” standard.

The Boomers, described as age 55 to 64, stand in stark contrast to the prior decade, which spent more time on the road in 2009. Young people, on the other hand (age 18 to 24) posted a 15 percent decline in travel. Broke kids with disposable income, it seems, don’t have as much disposable income as they used to … or they can’t sponge off their parents as much when they’re in a bind.

Asia compensates for rest of world in air travel decline

by Tom Johansmeyer on

From February 2009 to February 2010, outbound non-stop air travel from the United States remained flat, a seemingly promising sign in a travel market that’s been brutalized by global economic conditions. Take a look under the covers, however, and you can see that, for some destinations, we aren’t completely out of trouble yet.

According to the U.S. Department of Commerce, flights from the United States to Asia grew 9 percent year over year, which is what brought the global total up to break-even. The other outbound markets – Europe, Mexico and the Caribbean, posted year-over-year declines, which were exacerbated by the fact that these are these destinations occupy the largest part of the market. Travel to the Middle East and Asia, from the United States, showed the strongest growth.

For the first two months of the year, outbound air travel grew two percent relative to 2009, continuing the upward trajectory from July 2009. Seven of the past eight months had increases in outbound travel from the United States.

In January and February this year, five of the eight overseas regions experienced growth, with Oceana, the Middle East and Africa good for double-digit gains. Canada showed an increase of 1 percent, and Mexico was down 3 percent.

Americans may be spending more, but they’re clearly chasing deals when going on trips out of the country. In February this year, U.S. travelers on foreign carriers spent $2.2 billion, which is down 6 percent from February 2009.