Consumer IQ, Trends

More Americans are Foregoing Frugality to Travel This Holiday Season

Tired of saving money and eager to hit the road again, more Americans are expected to travel this Thanksgiving holiday than last year, AAA said in a report released Thursday. AAA forecasts 42.5 million Americans will journey 50 miles or more from home during the holiday weekend, 4 percent more than a year ago.

“Driving AAA’s projected increase in the number of Thanksgiving travelers is pent-up demand from Americans who may have foregone holiday travel the last three years,” said Bill Sutherland, Vice President of AAA Travel Services. The Thanksgiving holiday travel period runs from Wednesday, Nov. 23 to Sunday, Nov. 27.

“As consumers weigh the fear of economic uncertainty and the desire to create lasting family memories this holiday, more Americans are expected to choose family and friends over frugality,” Sutherland said.

Automobile and Airline Travel

About 38.2 million people, or 90 percent of holiday travelers, plan to drive this Thanksgiving, a 4 percent gain compared to Thanksgiving 2010, AAA said. About 3.4 million travelers are expected to fly this Thanksgiving holiday, a 1.8 percent increase from 2010.

But AAA cautioned against any quick recovery to pre-recession levels, and instead anticipates a “slow climb” from 2008 — a decade-low year for Thanksgiving travel.

More Expensive Airfare

Thanksgiving travel will be especially challenging for those flying. Holiday airfares are expected to be 20 percent higher than last year, according to AAA’s Leisure Travel Index. Faced with climbing expenses including rising fuel costs, carriers have responded by jacking up ticket prices and reducing capacity, or the number of flights.

“Air travel will certainly be constrained through the holiday period,” said Shane Norton, director of travel and tourism analysis for IHS Global Insight. “Fuel price increases have resulted in air travel fares being higher than last year,” he said.

More Crowded Flights

Airlines’ profitability under pressure is a key reason why air travelers won’t be getting any substantial deals, or sitting in roomier, emptier planes this Thanksgiving, according to the Air Transport Association of America or ATA, an industry trade group.

“ATA is projecting full flights again this Thanksgiving as is typical, despite a 2 percent decline year over year in the number of passengers traveling globally on U.S. carriers over this period,” said John Heimlich, ATA’s chief economist. For the first nine months of this year, operating expenses rose 16.1 percent, while operating revenues gained only 12.7 percent compared to year ago, Heimlich said.

Higher Jet Fuel, Gasoline Prices

Jet fuel prices are forecast to gain 39 percent to an average of $3.06 a gallon this year compared to $2.20 a gallon in 2010, according to the U.S. Energy Information Association.

Airlines are also grappling with rising operating expenses for salaries, wages, benefits, maintenance, repair, and aircraft rentals, according to the ATA. “So far, 2011 financially is shaping up to be worse financially than what the carrier experiences in 2010,” Heimlich said. Citing a recent Barclay’s research note, Heimlich said 2012 airline capacity levels may approach levels not seen since 2004 and 2005.

Gasoline prices are forecast to average $2.88 a gallon in 2011, up 33 percent from $2.17 a gallon last year, according to EIA’s forecast.

December Holiday Travel and Spending

Looking ahead to the December holiday travel, American Express said travelers will spend more this season than a year ago. Based on a survey of about 2,000 consumers, the average holiday traveler plans to spend $659 a person, an increase of 43 percent from last year, according to the survey.

Consumers will open their pocketbooks for great deals. “People are taking advantage of aggressive offers,” said Claire Bennett, senior vice president of American Express Travel. “For the right offers, they’re willing to spend,” she said.

While American Express didn’t ask survey participants specifically about 2012 travel plans, Bennett said data suggests consumers are eager to travel and recharge. “People are trying new things. They may be belt tightening in other areas, but they’re still interested in travel,” Bennett said.

More Americans Foregoing Frugality to Travel This Holiday Season” was contributed by CNBC.com.