As airfares soar due to high oil prices and reduced seat supply, travelers are looking for cheaper destinations to cut expense.
With high oil prices and reduced seat supply intersecting and roiling the aviation market, an analysis found that while travel demand is not falling, travelers' spending behavior is changing.
On the 5th (local time), Bloomberg reported that, ahead of the summer vacation period, a pullback in airline seat supply and rising prices are bringing changes across the travel market. Whereas travelers previously chose expensive, famous cities as vacation spots, they are now adjusting destinations, itineraries and even booking methods to fit lower prices.
The biggest reason airfares rose is that jet fuel prices have surged due to the Iran war. Heightened tensions around the Strait of Hormuz have increased oil price uncertainty, lowering expectations for airfare declines. According to the International Air Transport Association (IATA) and S&P Global, as of April, jet fuel prices in Asia-Oceania climbed to about $217 (316,320 won) per barrel, more than double the same period last year ($90).
Airlines, unable to bear high fuel costs, are cutting supply. According to U.K. aviation data analytics firm Cirium, as more airlines recently canceled operations outright, the number of flights worldwide originally scheduled for May fell by about 13,000, with more than 2 million seats removed.
The supply reduction is expected to continue. In the United States, low-cost carrier Spirit Airlines went bankrupt and halted operations starting on the 2nd. Delta Air Lines CEO Ed Bastian said fuel costs this quarter are expected to require about $2.5 billion (3.698 trillion won) more, adding that routes with low profitability are likely to be reduced or readjusted.
Airlines are passing the expense burden on to consumers. Major carriers are raising baggage fees and seat selection fees to reflect higher fuel costs, and round-trip nonstop summer peak tickets between Europe and the United States for the cheapest seats have climbed to over $1,000 (1,457,300 won), nearly double from about $549 (800,000 won) last year.
However, despite high airfares, overall travel demand is holding up, Bloomberg said. Travelers are keeping their plans but looking for cheaper options to cut expense. In particular, interest is growing in "destination dupes," lesser-known places where travelers can save money compared with famous cities that have high prices for lodging and more. According to online travel agency Expedia, consumer interest in Brussels, where hotel prices are about half of Paris, rose 40% from a year earlier, and searches for Naples, Italy, where lodging is 30% cheaper than Rome, increased 25%.
Laura Lindsay, a global travel trends expert at Skyscanner, said, "People still want to travel, but the way they prefer to do it is changing."
More travelers are also using mileage, but Bloomberg projected that the expense-cutting effect will be limited as the points needed to book premium seats are also rising. In fact, according to points price-tracking service Point.Pax, the average points required to book premium seats increased 18% from last year.