Rising fuel prices impacting travel
March 30, 2012 | By Ali Moffitt
Jasen Lee of Utah’s Deseret News wrote the following article about how rising fuel prices are impacting travel. He quotes Mike Cameron, CEO of Christopherson Business Travel (the parent company of Andavo Travel) with regards to business travel, and then later quotes Linda Smith, one of our Andavo Travel advisors, with regards to vacation travel.
SALT LAKE CITY — Gasoline prices nationally have hit an average of nearly $3.90 a gallon, up 5 cents from last week and more than 30 cents from a month ago, according to AAA.
In Utah, the average cost per gallon was at $3.69 — affecting how some people are planning to travel on the ground.
In addition, the rising price of jet fuel is pushing the price of air travel up for business and leisure travelers. Airline fuel has increased 7 percent since the beginning of the year — prompting many carriers to raise their prices, according to Mike Cameron, president of Salt Lake-based Christopherson Business Travel.“They have this variable called a fuel surcharge that accounts for the fluctuations in fuel prices as they move up and down,” he said, explaining that the airlines are trying to mimic the rental car model, where the company pays for the “seat” and the passenger (customer) pays for the fuel.
Cameron said carriers like Delta Airlines have seen its fuel prices jump $1 billion in the past year.
“(That’s) a 35 percent increase in their fuel cost year over year,” he said.
Despite the rising cost, he said that business travel has yet to be affected, though that could change if prices continue to climb significantly.
“There is a certain amount of business travel that is just necessary,” Cameron said. “They have to be there in order to take care of business.”
According to the Topaz Monthly Airfare Index, the average monthly cost of domestic travel increased annually from 2009 to 2011. Conversely, the average cost of international travel has declined each year since 2008.
Until prices rise dramatically higher, business people will continue to travel, Cameron said. Business travel is up about 6 percent so far this year.
Meanwhile, leisure travel will likely feel the squeeze much sooner.
Heidi and Tony Valez, who live in the Sugar House area, had planned for months to take their family vacation to Southern California during spring break, long before the price of gas began to jump. Now the cost of driving their three daughters and their niece to the West Coast will be quite a bit more expensive.
But, the couple said the cost of driving a large SUV from Utah would still be much cheaper than buying six airline tickets and renting a vehicle once they got there.
“For us, we’d already decided to go on the trip, so the fuel price doesn’t really matter,” Tony said. “It just makes us feel worse (when the bill comes later).”
“The fact that fuel is up around 20 percent is still a lot cheaper than flying,” he added.
Heidi Valez said the family will be staying in a condominium and buying groceries to avoid eating out as much “to save on that end.”
While the high fuel cost won’t impact their ability to enjoy this vacation, paying off the bill once they return could impact future plans and how they enjoy the rest of the summer, which will probably mean staying closer to home for a while, she said.
“(The high gas prices) will affect long-term plans,” Tony Valez said. “But for right now, we’re stuck with our (current vacation) plan.”
Linda Smith, travel consultant for Andavo Travel in Murray, said her client volume is pretty close to what is always is at this time of year. She said the rise in fuel prices has increased the cost of getting away, but as witnessed by the Valdez family, so far it hasn’t had a major impact on leisure travel — at least not yet.
“The flights are full,” she said. “So people are traveling.”
How long that trend lasts is still unknown, she said.