With thousands of leaf-peepers streaming
to the New England countryside to take in the fall colors, tour
operator Larry Niles has a slightly different perspective on the
gas crunch than most.
We hear a lot of
comments about people wanting to see the fall colors, but that they
dont want to have to drive to do it. So we put them on a bicycle
for five or six days, he said.
Would that life
were that easy for the whole travel industry. Exacerbated by storm
damage to Gulf Coast refineries, drilling platforms and pipelines,
gas prices have nearly doubled since the fall travel season last
year, and fuel costs for airlines and cruise lines -- already at
record levels -- just keep heading higher.
industry players said last week that they were seeing less of an
impact on travel than might have been expected.
hasnt kept them from losing a bit of sleep over what might lie
ahead, but for the time being, Americans continue moving about the
of Bike Vermont, headquartered in Woodstock, Vt., said his weeklong
and weekend foliage tours are booming, and last-minute bookings are
Foliage tours are
a major revenue source for tour companies in the Northeast. So
President Bushs request that Americans cut back on driving after
Hurricanes Katrina and Rita forced refinery and oil rig shutdowns
in the Gulf region has many foliage operators worried that business
time trumps fuel costs
indications from a number of sectors suggest that consumers still
consider vacation time too precious to let higher fuel costs stop
them from traveling.
A survey released
last month by research firm Yesawich Pepperdine Brown and Russell
(YPB&R) showed that a strong majority of adults who were
planning vacations within six months said they were unlikely to
cancel trips because of gas prices.
But their answers
were premised on prices below $3.50 a gallon. Higher prices would
cause 19% to cancel trips, and 53% said they would alter travel
plans if prices pushed that high, said CEO Peter
It is noteworthy
that the sample divided along age lines. Among older Americans, who
make up a sizeable portion of those traveling by car and motor
homes to destinations such as Las Vegas and western resort areas,
nearly half appeared to be considering altering their vacation
A survey in
mid-September by AARP found that 47% of those over 50 intended to
limit travel and vacations as a result of high gas
Cathy OKeefe, a
public affairs coordinator for the Travel Industry Association in
Washington, said the group did not conduct a survey this year
related to fuel costs and travel because they did not anticipate
much change relative to last year.
Fall travel is
going to be flat this year, OKeefe predicted. But last fall was a
record season. So if we keep pace with last year, were still doing
OKeefe, who said
she is among those who believe gas prices will decline, said
increases in total costs of a vacation trip in the U.S. are
actually less than most people assume when they see soaring gas
Overall, when you
look at how much more people are spending per trip because of
higher gas prices, it is not a major increase in the cost of their
trip overall, she said. And driving is still attractive for family
vacations because even at $200 each for an airline ticket, families
spend about $1,000 to fly. You can cover a lot of miles for $1,000
On the other
hand, the price of heating fuel is also expected to soar. This will
produce unbudgeted costs for the hotel industry that will have to
be passed on to customers, thus increasing other travel
taking a huge hit
arent the only ones feeling the pinch. While it remains to be seen
if sustained high gas prices will cause tourism to fall in some
states, there is plenty of evidence of their impact in other
U.S. airlines are taking a severe hit, recently attributing
everything from route cancellations to bankruptcies, in part, on
the cost of jet fuel. The price hikes have also prompted schedule
changes and flight cancellations, and they even seemed to be
encouraging cancellation of light flights to improve load
Delta said last
week that it would cancel flights with too few passengers in cases
where it could quickly accommodate disrupted travelers on another
flight with a minimum delay, although that practice was set to end
this past weekend.
As the industry
heads into the winter season, international routes are also under
scrutiny. American said it would suspend service between Chicago
and Nagoya, Japan, at the end of October, primarily because of fuel
costs. Northwest suspended daily service indefinitely between New
York and Tokyo on Oct. 2.
pointed the finger at fuel prices in suspending 15 roundtrip
flights in markets the airline serves from its Chicago-OHare and
Dallas/Fort Worth hubs. However, these changes reduced frequencies
without eliminating routes, and American said it anticipated
restoring those flights as early as Oct. 30 if fuel prices
For now, prices
are still rising. New York Harbor jet fuel closed at $2.43 per
gallon Oct. 3, and Gulf Coast Jet reached a record $3.01, according
to JP Morgan analysts.
comes not only from oil prices, but because the cost of refining
jet fuel, already historically high, is still rising. Merrill Lynch
aviation analysts said theyre forecasting the difference, known as
the crack spread, to increase from $16 to $40 per barrel for the
fourth quarter. Merrill Lynch forecast jet fuel at $2 per gallon in
the fourth quarter, but the change could force it to $2.50 per
gallon, analysts said.
and lower nonfuel costs will partially offset increased fuel
expenses, analysts said, but they are now predicting a fourth
quarter pre-tax loss for the seven largest airlines at $3.5
billion, up from earlier estimates of $2 billion.
as usual for cruise lines
meanwhile, have not changed operations as a result of higher fuel
prices, but as costs increase, so does the pressure to recover
Corp., fuel costs rose $50 million during the third quarter, CFO
Gerry Cahill told analysts in September. In mid-September, Cahill
said fuel costs were projected at $308 per ton for the fourth
quarter, up from $214 per ton a year ago.
typically use bunker fuel, a heavier distillate than diesel, to
power their ships, although several new vessels also have gas
turbines that burn marine gas oil, a lightweight fuel similar to
Bunker trades at
about a 34% discount to crude oil, said A.G. analyst Tim Conder. In
late September bunker fuel traded for $44 per barrel, compared with
$67 per barrel for crude. But bunker fuel prices, according to
Conders research, are still up more than 100% from February
Its too early to
see tangible effects of higher fuel costs on the cruise lines, but
smaller companies, such as Radisson Seven Seas and Crystal, have
levied fuel surcharges to offset higher prices.
Carnival CEO Micky Arison waived off the concept of a surcharge,
saying the company has been successful in mitigating a significant
amount of fuel increases through yield increases.
Yesawich said he
understood that some people are concerned about cutbacks in travel,
but that he wasnt among them.
I think many
people will heed that request, he said of President Bushs appeal to
conserve gasoline. But how that plays out is to be seen. Some may
take shorter trips, others may just spend less on some part of
their vacation. I think the two ideas can co-habit here without a
reporter Dan Luzadder, send e-mail to [email protected].
and Andrew Compart contributed to this report.