News flash: If you thought that traveling in 2022 was expensive, after more than two years of pent-up desire, I am here to report that 2023 will see even higher fares.
So many in the industry were of the belief that after several strong months of incessant travel, easily surpassing pre-pandemic times of 2019, a certain serenity would return to the industry. Industry experts were of the belief that this heightened demand would recede, come the fall and winter months.
Reality is a far different story. It seems that the chances of airline passengers getting any much-needed relief with the costs of flying are dust in the wind. Airline executives around the world agree that air travel, already quite expensive, will become even pricier in the near future.
The director-general of the International Air Transport Association, William Walsh, opines that the price increases across the airline industry will be triggered by soaring aviation fuel costs and air carriers’ financial difficulties caused by the COVID-19 pandemic. In the United States, refineries’ production of jet fuel dropped to its lowest level since 2014.
Delta Airlines is the owner of its own refinery. Monroe Energy is a wholly-owned subsidiary of Delta. Delta stated that it considered the purchase of the refinery an innovative approach toward managing fuel expenses. The 185,000 barrel-per-day refinery restarted production in September 2012. Delta spent around $100 million to transition 40% of production to jet fuel for its commercial fleet. Innovative it may be, but it did little to mitigate the rise in airfares.
Airline ticket prices in the US have spiked by 25% in the past 10 months. This is the highest increase since 1989, and airfares continue to rise.
The war waged by Russia in Ukraine is another factor driving up global air travel costs. While El Al is going to benefit by flying over Saudi Arabia on a few select routes, having to use alternative routes to avoid flying through Ukrainian and Russian airspace is another factor that contributes to the rise of air travel prices. Both Air India and British Airways have publicly announced that their flights from Europe to Delhi require a major detour, adding several hours of flight time, leading to significantly higher jet fuel consumption.
It is also a problem of simple supply and demand. Leisure travel demand has fully rebounded to pre-pandemic levels, but the supply of flights is still down almost 20% because airlines are still short on pilots, planes and ground crew. Israeli airlines, like US airlines, report the same thing: Demand is off the charts. Anyone who has even perused basic economics knows emphatically that high demand, in conjunction with low supply, leads to higher airfares.
AIR TRAVEL is also not immune to the skyrocketing inflation, which is moving at its fastest rate in the last 40 years. The Israeli shekel, like most other currencies, continues to weaken against the US dollar, but to date this has had almost no effect on the Israeli consumer.
Whereas the majority of countries in the world set their airline fees in the local currency, in Israel airline tickets are quoted in US dollars. Originating due to pressure from El Al in the 1980s due to the galloping inflation, this reliance on foreign currency to set airline prices borders on pure audacity. Be it a loaf of bread, an electrical vehicle or your house, all rates must be quoted in Israeli shekels. The Israeli consumer has no such advantage when purchasing an airline ticket to anywhere in the world.
The foreign carriers enjoy having their product linked to one of the strongest currencies, and the Israeli consumers continue to purchase tickets with nary a concern for the rate of exchange. They continue to purchase tickets and vacation packages at unheard-of rates, and with the weaker shekel are paying far more than in the past. Interest rates worldwide are going up, but up to now this has not slowed their desire to travel.
Labor shortages across the travel and hospitality industry, rising raw material prices and a repressed desire to travel are all having an impact on services and are the primary drivers of the price surge. For air travel, the increasing demand for travel, now that borders have reopened, has led to the increase in passenger ticket prices. The rising cost of jet fuel has more than doubled this year and shows no sign of abating.
HOTEL RATES have accelerated across the world with almost a 30% increase in Israel and throughout Europe, according to industry sources. The dual issues of high demand and continued capacity constraints due to the lack of labor are at the nexus for these increases.
Car rental agencies have yet to recover from reducing their fleet sizes due to the pandemic, resulting in a shortage of vehicles in the face of high demand. This, though, is being resolved, and one can already see that the major rental car companies have begun lowering their rates this winter. Their supply is slowly being replenished.
When it comes to meetings and events, conferences and congresses, the repressed demand has resulted in dramatic increases of participation fees. Participants attending events in the last quarter of this year are laying out 25% more than costs in 2019, and it is forecast to rise a further 7% in 2023. Demand for business travel and meetings is back with a vengeance; of that there is absolutely no doubt.
How to save on travel in 2023?
If you have big travel plans in 2023, or you’re the type of person who tends to travel often, then it’s important to do what you can to keep your costs to a minimum. The last thing you want is for your plans or habits to lead you into untenable amounts.
One good bet is to research airfares and hotel rates ahead of time, and book strategically. Hotels in particular tend to have flexible cancellation policies, so booking a room well in advance of a given trip might work to your advantage.
It’s prime time to start thinking about – and maybe even to book – some trips for next spring and summer.
I know, I know: it’s hard to think that far ahead. But airlines sell flights at least 11 months in advance, bringing your booking window into at least early September – and they’re adding more flights every single day. If you’re on the hunt for a cheap cash fare, you might be able to score a great bargain with some ultra-advanced planning. Eleven-plus months in advance, right when the schedule opens, is a serious sweet spot.
Google, the web giant behind the world’s best flight search platform, crunched the numbers based on five years of airfare data to calculate the best time to book international flights. According to the data, Google says the best flight deals typically crop up between 50 days and 179 days prior to travel, with the best deals popping up around 129 days beforehand.
According to those numbers, you should begin looking for your international flights about six months before travel and keep digging into them until about two months before you fly. The sweet spot for the best deals, according to the data, is about four months in advance. Take CES 2023, the most influential tech event in the world, scheduled to take place this January in Las Vegas. My office alone has already issued dozens of tickets for this event for those consumers who planned ahead.
We have all heard that some days are cheaper than others, and simple logic will tell you that flying in the middle of the week usually costs less than flying at the start of the end of the week. The reason is simple: the vast majority of business travelers prefer to fly at the start of the workweek and fly back at the end of the week.
IN THE US, President Joe Biden took to the airwaves last month announcing travel rules to fight unnecessary hidden fees. The underlying hope is that this will result in lower fares.
He announced rules requiring airlines and travel sites to be more transparent about additional fees customers could be charged. Under the proposed rules, airlines and travel sites that fly in or out of the United States would have to disclose up front, the first time an airfare is displayed, any fees to pre-reserve a seat, to change or cancel your flight or to check a bag or for carry-on baggage. He asserted it would lead to increased competition between carriers.
“Capitalism without competition isn’t capitalism,” he said. “It’s exploitation.”
For example, Biden said, some airlines were charging fees for families to sit together. Some airlines were charging customers flight change fees even for flights canceled by the airline.
“They cancel on you, and you have to pay a fee to rebook,” Biden said. “Come on, man. It’s just simply not fair.”
Say what you want about his politics, but when it comes to airlines hoodwinking the public, he is 100% spot on.
It’s no different on the Israeli airline sites, be it El Al, Arkia or Israir. Let us call it bait and switch. You see a reasonable fare to your desired city, but only once you start reserving do you see all the other taxes. And to find the cancellation or change fees you will need to read the fine print.
Passengers deserve to know the true cost of their flights before they buy a ticket. They need to know all of the conditions. And more importantly, they need to find an easy way to communicate with the airline. Today, most airlines’ customer service is abysmal; and as they love to tout how good their product is or how wonderful there in-air service is, when it comes to basic consumer rights and simple customer service, few airlines come close to providing a modicum of good service.
It is why so many of you continue to use your travel agent. Travel agents have access to a variety of tools that the average consumer is not able to use or doesn’t know about. They can sometimes get you a better seat on an airplane, added amenities at hotels, room upgrades, event tickets, and plan activities for you. And the best ones can be reached 24/7.
My motto is simple: Earn your success based on service to others, not at the expense of others.
The writer is the CEO of Ziontours, Jerusalem, and a director at Diesenhaus. For questions and comments email him at mark.feldman@ziontours.co.il