Looks Like A Tough Summer Travel Season

As I prepare to head to Southern California on a business trip I thought I’d offer a few observations on the upcoming summer travel season. With millions of schoolchildren heading out the doors it is traditionally the time for families to take off on the annual family trip. For many people it is the one time of the year that the family is able to get out and really build some special memories.

In addition, just as many retailers depend on Christmas for their profit margin, elements of the travel industry look to the June-August period to climb into the black. But this year it looks like there could be a lot of disappointment as rising oil prices combine with a slumping economy to make travel harder than ever.

Families planning to fly will get a very nasty surprise if they have not already booked their tickets. Airlines have already acted to severely spike prices, especially on non stop flights where the fares have been doubled or tripled. For a family with 2 or 3 children this kind of price increase could make a trip all but impossible.

Of course you can save some money by taking flights with a few stops, but even there the prices have risen by double digit percentages. Then there are the many fees which have been making the news lately, most notably the $ 15 per bag fares being charged by some carriers.

Road travel is no easier with gas prices rising the way they have been. Right now gas is well over $ 4 a gallon in many parts of the country and predictions are that it could reach $ 5 per gallon by mid to late summer. This does not bode well for those who planned a drive to Disneyland. Indeed figures released by AAA show that travel over Memorial Day was down by 13%.

Obviously the biggest immediate impact of this slump for the average American is the loss of a special trip somewhere, but the long term impact could be far more serious. Airlines are already in serious trouble and a very slow summer could drive some smaller (or even larger) carriers over the edge.

The larger theme parks are likely to survive all but the worst downturn, but some smaller attractions could have a harder time. From there the impact spreads further than you might think. Obviously hotels and other travel related industries are the first to feel the blow but as they are forced to lay off employees then we start to see the problems spread.

An employee without a job can’t pay the mortgage, and that could only exacerbate the already distressed real estate market. Slumping home prices reduce tax revenues, again a serious problem with state and local governments already suffering.

As a bankruptcy attorney I remember the flood of cases after 9/11, when travel industry employees found themselves out of a job and out of luck. I am starting to see signs of that happening again. Obviously we are not going to see the entire economy collapse simply because of slow travel, but it could be another stone on the pile.