Why airfares will keep rising

Happy Semana Santa! What is that you ask? It’s Holy Week, the pre-Easter holidays marked by processions and festivals across predominantly Catholic countries.

We didn’t know much about this holiday as we were preparing to come to you this week live from one of our favorite Mexican beach destinations, Puerto Vallarta. But then we found out that the condo that we had rebooked for the third time since December because of work conflicts, omicron, etc. fell right smack dab in the middle of it – and that Puerto Vallarta is one of the top destinations for Holy Week vacations. 

“You're coming to PV during Semana Santa???? Estas loca? We're skipping town and going to Mexico City,” my friend and luxury travel podcaster Bruce Wallin, who lives there, responded when we emailed him about trying to get together. After doing some research, we realized that the week before Easter is one of the busiest of the year for Puerto Vallarta. While it would be fun to experience the traditions, we really wanted to relax, not battle traffic and crowds. So we pushed that trip off yet again. 

Travel Essential Takeaway: Check your calendars carefully for any holidays around your planned trip and do a quick internet search about how people might celebrate them in your destination before you book. Oh, and thank goodness we forked over that extra $100 for fully refundable tickets.

Now, to the news:

• New flights to try. Last week, we told you about new routes being added by JetBlue and Air Tahiti Nui. Well, this week our friend and aviation writer Robert Silk takes a closer look at more exciting vacation-oriented flights being added as leisure travel recovers much faster than business travel. Among the additions: the first non-stop from the U.S. to Vietnam. Check out Robert's Travel Weekly column for details.

• Will the Biden Administration finally drop Covid entry tests? That’s the big question of the week. The travel industry – and, in particular, airlines tasked with policing Covid test results – has been pressuring the White House to follow the United Kingdom and other countries in eliminating pre-entry testing for all inbound international travelers. So, many people are hoping that the U.S. will let the current testing mandate expire on Monday. But we’re not getting our hopes up. As Michelle Baran from AFAR.com reports, the president’s Covid-19 coordinator told a press briefing last week that “there are no plans to change the international travel requirements at this point.” Indeed, the administration has been standing firm against industry pressure throughout the pandemic. And the order is set to expire just as we are starting to see yet another surge. Stay tuned. Also up in the air: whether and how to ease up on mask mandates on airplanes and other forms of public transportation. On the ground: Uber still requires customers to wear masks.

• Speaking of Uber... Travel companies of all kinds have dreamed of creating an “uber” app for years, but none have done it – until, well, Uber of course. The company is moving closer to capturing the entire travel journey within its app with a pilot program that integrates flights, hotels, trains and car rentals within the United Kingdom.  If all goes well, we can expect Uber to expand the program to more countries. PhocusWire takes a deeper look at other moves in the super app space.

• Travel hero.  As we get older and read about highly successful people who are younger than us, that “boy am I an underachiever" thought occasionally passes through our heads. But forget fame and fortune. Here’s the achievement we’d really like to match: Sal Lavallo has traveled to all of the world’s 193 countries. And he’s only 27! Conde Nast Traveler asked Sal 193 questions about his adventures. At first we wondered who in the world has time to read 193 questions, but it held our short attention spans through the very last one.

• Surviving TSA lines: Xanax – or maybe cannabis? Our friend and loyal reader Melinda Guillemete retweeted Monica Lewinsky’s viral post last week about long TSA lines that cracked us up. Melinda suggested airports should dispense Xanax to help travelers "deal with the awfulness." We certainly don’t travel without it. And with the Federal Aviation Administration (FAA) recently levying record fines for air rage, we think she’s on to something. Still, given how stingy our doctors are with the anti-anxiety medicines, we think there could be an easier way to help travelers chill. Maybe if states with legal cannabis let dispensaries open alongside bars in airports, we’d see a much calmer traveling public. I mean, we’ve seen lots of angry drunks. But we can’t say we've ever seen an angry stoner. Airlines would have to beef up their snack carts, though.

• K.O.A. camping goes luxe. That's a headline we never thought we’d write, but hey, we're still living in Covid times. For travelers who want the classic American vacation without pulling a trailer, K.O.A. has a new "glamping" brand called Terramor that offers campers tents and cabins with luxury touches, such as private bathrooms and resort amenities like massage and food services, a nature-inspired pool and fenced-in dog area. Read more about it in The New York Times. We can already see Tesla drivers pulling up. Let’s hope K.O.A.’s luxe model includes superchargers.

Expert Q&A: Why airfares are poised to keep soaring

Travel Essential believes being an informed consumer helps us plan better and travel smarter, no matter where we’re going. So we’re pleased to introduce you this week to our friend Richard Aboulafia, one of the world's leading aviation industry analysts. We recently caught up with Richard to get his expert take on the state of commercial aviation, just as American, Delta, United and the nation’s other publicly traded airlines get ready to share their quarterly financial performance to Wall Street. Bottom line? We as consumers shouldn't expect “business as usual” anytime soon. This Q&A has been edited for length and clarity. -- Barbara

Q: What’s the state of the USA’s commercial aviation industry today, in light of Covid and Russia’s invasion of Ukraine?

The biggest challenge for everybody is that it's almost paradoxical. The downturn was awful, but the upturn is pretty awful too. Airlines are coping with meeting demand, labor challenges, inflation and they’re also having to cope with extremely suddenly expensive fuel. We're the last sector of the economy to recover. Normally, we're the ones to lead the way. Think of the implications of that -- we're now the last in line to hire and buy at a time of inflation.

Then Russia happened. A lot of titanium castings* (which are essential for airplane parts) come from Russia; it's the biggest single country that produces them. And you already had supply chain challenges. 

Q: What does this mean for airfares?

Sorry, travelers. The more you want to travel, the more costs will go up.

How quickly do we (the airline industry) feel secure enough about the recovery so that we can raise prices? We aren't there yet. Book a flight -- it’s cheap. Everyone is complaining about inflation and fuel. We can't afford “cheap.”  But these costs have to be passed along. 

[Editor's note: In historic terms, flights continue to get cheaper when the effects of inflation are taken into account, Aboulafia explains. There are ups and downs, but the long-term yield trend remains low. That doesn't mean we're not feeling the squeeze. Airplane tickets are getting pricier now as demand recovers from pandemic-era lows. Last month, for instance, prices were 20% higher than pre-Covid 2019 levels, according to Adobe Digital Economy Index stats cited by Travel Agent Central.]

Q: Are the assumptions that airlines relied on before Covid to determine airfares still accurate, or are they now totally wrong? 

For leisure travel, they’re fine. The industry is not worrying. For business travel, let’s break things down. Two-thirds of business travel is customer facing – and that segment’s fine. The one-third that isn’t customer facing is not so fine.

This is traditionally the premium-cabin, longhaul segment (normally transported on widebody aircraft). It doesn’t mean it goes away, but this is the segment that is the most damaged (of all passenger aircraft segments).

Q: Without the masses of higher-paying business travelers that airlines used to carry, it sounds like we’ll be sitting in smaller jetliners for the near future. Is that the case?

This crisis is yet another reminder why small is beautiful. If you get rid of a significant portion of front-end-cabin types (the large widebody aircraft), then we will have more smaller aircraft. And if airlines have more smaller jets, airlines will have an easier time filing them. With widebodies, airlines have more first-class seating to sell.

From the peak before Covid, the widebody market fell 50%. It’s going to take a super long time for that market to recover -- in our view, a decade. A lot of it is going to the A321s and 737 Max 9 and 10s.

Q. Does this mean the route map has gotten smaller and travelers won’t be able to fly to as many places?

No. It got bigger.

You can do more flights. It's a paradox. The more systems grow, the greater the number of city pairs that an airline can do especially between the U.S. and transatlantic.

What is new is that you can fly directly from North America to Croatia.  New York has flights, and other cities – most notably Philadelphia – have attempted them, but the Covid-related collapse in international traffic disrupted that.

I live in Washington, D.C. There are some wealthy people here. It's a great travel market. Up until a few years ago, I couldn’t go to Portugal, Israel and Spain directly and now I can. That was a pre-existing trend, and it has been accelerated by Covid. 

*Editor’s note: Our friends at The Air Current (ATC),  who expertly cover the business and technology of flying, report that Russia supplies 45% of the world’s aerospace titanium parts, like landing gear pieces. ATC also notes that these parts for now are curiously escaping severe sanctions, unlike Russian diamonds, vodka and caviar. Note: Subscription required, and worth it!

And finally ... Is it a bird, a plane, a flying candy cane, or, maybe, the Cat in the Hat?

You’ve probably seen the photos of those crazy, colorfully striped airplanes from the  German airline, Condor. Fast Company had fun with the story and the reactions it generated on social media. Aeortime Hub had our favorite headline, “Condor unveils new aircraft livery inspired by beach chairs.”  

We of course immediately thought of Dr. Seuss’s Cat in the Hat when we saw their red-and-white-striped plane.

Love it or hate it, the small German airline Condor that was previously owned by the now-defunct Thomas Cook Group is certainly getting the attention it needs to re-launch service between major U.S cities and Frankfurt, Germany.