Unless you have been living under a rock for the past three weeks, you probably have heard about (or felt) the increased prices for gasoline. I filled up my car the other day and had flashbacks to driving my 1998 Ford Expedition with a $60 fill-up. But unfortunately, that pain will not stop at the pump. And yes, it will move into the travel sector as well.
The airlines are still reeling from COVID (despite the billions given to them) and are now looking at an increase in jet fuel. Fuel accounts for about 50% of operating costs for every flight. There has already been a 50% increase in cost this year and more increases are on the way.
But there is time. Experts believe that it will be three to maybe four months before consumers will feel that pinch in ticket prices. Helane Becker, an airline analyst at Cowen & Co. predicts a roughly four-month delay before fares catch up. Most airlines are no longer hedging their fuel purchases but do have long-term agreements in place that dictate the pricing.
And here is where the travel professional comes in. For your clients that are traveling or considering traveling, let them know. Get them to commit now to lock in the lower pricing. Some may say it looks like predatory marketing, but if it is positioned correctly…
The Wrong Way!
Airline fuel prices are rising and if you don’t buy your tickets now, it will cost you a lot more down the road when you do go to buy them. Give us a call today to get that reservation made.
The Right Way!
Just wanted to let you know that many experts feel that like gasoline, jet fuel will rise in price ad that will be reflected in airfare pricing in about three months. So, if you have any firm plans or are seriously considering a trip, it could save you a lot of money by making a purchase sooner rather than later. We stand by ready to go over any options!
The call to action is the same in both scenarios. The message is the same. The reception will be different!
Currently, jet fuel is $2.30 per gallon and is expected to rise to $3.45 per gallon once current reserves are depleted. That is another 50% increase, and with fuel comprising 50% of the fare, well, you get the idea. Did you know that a 747 from JFK to LHR will burn 21,700 gallons of fuel? That is just shy of $50K today. And will be just shy of $75K shortly.
Crews are bare-bones, service is minimal, and staffing is hard to come by. There is no other place to cut expenses to keep fares favorable and people excited about traveling, and the only choice will be to pass along the additional cost to the customer.
It stinks. For all of us. But as professional consultants, it is our job to deliver the message—good news or bad. The call to action is to buy now if it makes sense. I do not know yet how this fuel volatility will affect the cruise industry. I suspect they cannot escape it either, so stay tuned!
Now for me, another $60 to fill up the car!
