Due to the slow economic recovery flying has fallen out of fashion lately. Forecasts by the International Air Transport Association predict that airline profits will decline by 78% to $4 billion this year. Compared to last year’s net profit of $18 billion IATA’s predictions line up with studies about vacationers planning to travel by car.
An American Express Spending and Saving Tracker as well as a survey performed by Ally Bank found that because of rising gas prices, people are more likely to drive than fly this summer.
The IATA had originally predicted annual profits to hit $8.6 billion in March but reappraised that number due to disruptions to global airlines such as political unrest, natural disasters, rising gas prices, the unemployment rate, and the indecisive economy.
Conformity across separate surveys
Three individual and unrelated studies which MyBankTracker.com has covered help to prove that profits will certainly decline this year for airlines unless they can somehow afford to cover drastic price drops.
- According to the Car Care Council, a family of four traveling 1000 miles by air can expect to spend an average of $1,508 for tickets not including baggage and transportation costs, while the same trip would only cost them $350 to travel by car.
- Then, according to the American Express Spending and Saving Tracker, those who plan on taking an average of two week-long vacations plan on spending an average of $1,200 per person and three weekend-getaways plan on spending an average of $300 per weekend
- Finally, according to an April 2011 survey by Ally Bank, 53 percent of respondents said they plan to travel by car this coming summer, compared to only 16 percent of respondents who plan on traveling by plane.
With so many factors pointing to people avoiding planes this summer, airlines can expect to see the kinds of drops predicted.
Some good news
It’s not all gloomy out there. The American Express Spending and Saving Tracker did show that people are still willing to travel outside continental U.S. to destinations like the Bahamas and Europe. Americans traveling to Europe comprises a valuable demographic for airlines to target if they want to offset losses from more local flights. Perhaps deals and discounts will tempt more people to hop a plane to Italy or France.