Get ready for the most expensive holiday travel season ever
By Chris Isidore, CNN Business
For travelers getting ready to make their first holiday trips since before the pandemic: prepare for sticker shock.
The good news is that the prices for airfares, gas and hotel rooms are down from the record highs hit earlier in 2022, but they're still among the highest on record for this time of year. Only rental car prices are lower than what travelers were paying at the end of last year, although they're still far above pre-pandemic levels.
Here's what will cost travelers more this holiday season:
When air travel ground to a near halt in 2020 due to the pandemic, US airlines cut staff through early retirement and buyout packages. Staffing is now approaching pre-pandemic levels at most carriers, but the number of flights and seats available haven't returned to those levels.
Data from aviation analytics firm Cirium shows the number of flights scheduled for November and December is down 15% from the same months in 2019. Many of those missing flights previously were flown by smaller regional carriers serving smaller airports, and some of those airports have since lost service altogether. But even with a greater percentage of flights on larger planes, the number of seats available is down 3.5% compared to that same period in 2019.
A surge in Covid cases at the end of 2021 depressed demand for leisure travel, but this year it's positively robust, according to the airlines and industry experts.
"Holiday travel has come back as strong as ever, and leisure travel is why that recovered," said Scott Keyes, founder of travel site Scott's Cheap Flights. "So many people wanted to travel over Labor Day and July 4, and as we're going to see pretty soon, over Thanksgiving and Christmas."
And that combination — strong demand and a tight supply of seats — means high fares.
The average airfare is up about 40% from 2021, with leisure travelers paying an average of $289 one way, according to an airfare tracker compiled by Wall Street analysts at Cowan.
But it's not just in comparison to pandemic pricing that fares are higher.
Travel site Hopper says that airfares have risen 7% compared to the same period of 2019, and are up 17% when comparing prices for those who waited until a week before Thanksgiving to book a flight.
"Holiday travel is definitely more expensive than we've seen in previous years," said Hayley Berg, chief economist for Hopper.
Of course most holiday travelers never get on a plane — they drive. AAA's estimate is that 49 million will travel by car over holidays, compared to 4.5 million who fly. And for those drivers gas prices are a far bigger concern than airfares.
The good news is that price of a gallon of regular gas nationwide is well below the $5.02 record hit in June. AAA reports that the average as of Sunday stood at $4.67, down 27%. And prices continue to fall — the average price is down 11 cents a gallon in just the last week.
But prices are still 8% higher than this time last year. The price of gas is typically at its seasonal low at the end of the year, frequently just before Christmas.
Even with the annual surge in holiday travel, the amount of driving in November and December is typically well below the summer driving season. And numerous factors are driving oil and gasoline prices to historical highs around the world this year. Prime among them is Russia's invasion of Ukraine, which sparked sanctions on Russian oil. US refining capacity, which fell during the pandemic, has yet to recover.
Sunday's average price of a gallon of gas is 46% higher than the average price on November 20 over the last 20 years, according to data from OPIS, which tracks gas prices for AAA.
Other travel costs
Hotel prices also are more expensive than they've ever been this time of year. The Consumer Price Index, the government's key inflation gauge, shows the cost of lodging away from home hit a record in May, and the October average, the most recent available, is down just 2% from that peak.
Prices are are up 6% from a year ago, and are 12% higher than in October 2019. While CPI does not give dollar averages for the prices it tracks, Hopper puts the average hotel room price at $189 over Thanksgiving weekend and $218 over the Christmas week.
Once again, strong demand and tighter supply — some hotels did not survive the pandemic, others are still scrambling to find the staff they need to fully reopen — is lifting prices.
Rental car companies slashed their fleets during the early months of the pandemic, selling the cars they had to raise cash. With automakers still not back to full production due to a shortage of parts needed to build cars, including computer chips, it's taken a while for the rental car companies to replenish their fleets to meet demand.
The good news is that October CPI data shows car rental prices are down 3.5% from where they stood in October of last year, and down 15% from the record set in June of 2021. Still, rental cars are 46% more expensive than they were in October 2019.
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