Travel Industry Strategies that Affect the Traveler Due to the Economic Downturn

Almost everyone has been affected by the economic downturn since 2008. First one sector of the economy started to falter causing ripples of influence that caused others to stumble, with more ripples causing more to fall.

The travel industry has not been exempt from that scenario. Of course some areas of the industry have been hit harder than others. Some of the sectors that were hit the hardest, of course were the airlines and the hotels. One of the areas that was not hurt was the car rental business.

I'm listing not just the strategies of what some sectors of the travel industry are using to keep a profit, in the current times that we are living in, but I'm also including some suggestions for your own cost cutting to save where you can from what the various businesses are doing.

Car Rental Agencies:

The car rental industry, as a whole, still did some downsizing to accommodate the changed financial climate that is our present reality.

Hertz acquired Advantage Rent A Car in 2009 and is now in the process of adding Thrifty and Dollar to their fleet helping them to surpass Enterprise in size. Enterprise controls Alamo and National as well as it's own brand. Avis operates Budget as well as it's own business.

The car industry has managed to not just successfully weather the downturn but to profit while going through it by cutting it's overall fleet of vehicles by .7 million, through out the industry in the past four years.

Due to their tighter inventory control, the agencies have also been able to often require a two day minimum rental for a vehicle over the past 1 1/2 years. So, if a vehicle is only needed for a one day in-and-out business trip there's a good chance that the contract will require a rental at the two day price.

The taxes and fees have also risen due to two factors; 1; Local cities and the state, in which the agency operates, due to a shortfall in their income, have raised the taxes that they charge the rental agencies. The agencies have been a favorite source for raising needed operating funds for special municipal projects. 2; Items such as the GPS, that can be included in the rental are now being charged separately to the bill.

Some things, like the taxes, you can't change. But by carefully going over the rental agreement and asking questions over each part, you will at least know what you are agreeing to and know what your options are short of not renting the vehicle.

We belong to AAA. I rent my car through them at a discount that's large enough to either greatly defray or actually pay for my annual fee, depending upon how many days I rent for. I use my major credit card to rent the car so I don't need to buy rental insurance and I've found that I can get a better deal refilling the gas tank, locally,
the night before I return the vehicle rather than prepaying for a full tank. Which can be very wasteful, especially, if I don't use most of the gas that's already in the vehicle when I take it off the lot.

Hotels Chains:

Hotels in different parts of the country were affected differently depending upon the local situations. For instance, Washington DC wasn't greatly affected whereas New York City's prices came down in the past year, around 25 percent depending upon the individual situations.

I recently rented two different motels and found that at least for the one in the San Francisco area, the price has risen around 7 percent from two years ago.

So, depending upon the location that you intend to rent your hotel room in, the price may be the same, may have gone up or may have decreased in the past year. You just need to shop around for the best prices.

But even then, depending upon what else you plan to include in your stay, there can be added fees beyond the taxes. Especially if you are staying in a mid to high end motel or hotel that caters to business clientele or specialized tourist groups, such as the hotels in our Nation's Capitol or other major tourist destinations in our country.

It also depends upon where the hotel is located as to whether any extra fees are charged. However, some of the possible fees include such things as, early checkout, additional room service charges and holding guest's bags after checkout. There may also be charges for certain business related services because many may have been outsourced due to a lower demand for them.

I would suggest that when you are shopping around for your hotel,that you check out what is offered on their website and assume that if it isn't mentioned as being offered that it either is not available or is available for a fee. When you check in, be careful to go over the rental agreement and to ask questions about what the hotel does presently offer and what the fees may be, so that you can decide whether you want them or can do without them.

Airline Industry:

This is the area where some of the most wide ranging changes have taken place. Some of them are easily noticeable and others are more hidden but do show up in the final ticket price or in how our flight experience might turn out.

The Most Noticeable Changes:

Most of us may be aware that most airlines now charge for all domestically flown checked luggage except for Southwest who still doesn't charge for either the first or second checked bag and Jet Blue doesn't charge for the first checked bag.

Many of us may have also become aware that just about the only thing that Spirit Airlines isn't charging for are their toilets and under the seat carry-ons, since they have added fines of up to $45 for anyone who dares to bring on a carry-on that requires the use of their overhead bins and threatens the safety of their personnel or other
passengers.

I'm just repeating what I read in their official statement about their reason for the fee change. I'm sorry but it sounds a bit like the language I read when the airlines said that due to customer input they had changed their free meal service to a fee service, making it sound like we had asked them to add more nickel and dime stuff to our bills while giving us less for it..

But perhaps some of us are not aware that American, US Airways, Delta, Jet Blue and United have clearly stated that they will not be charging for carry-on bags, especially since they found themselves being threatened with legislation from Senator Chuck Schumer. Continental and Southwest haven't stated what their policies would be.

But considering Southwest's advertising policies in the past on checked luggage fees, I wouldn't be surprised if they were holding their breath hoping for another enormous, funny, advertising coup on how they don't charge for that either.

Their policy is definitely paying off for them. They fly the most passengers domestically of any other US airline.

Southwest got me too. This is the first year that all of my domestic flights are being flown exclusively through them. I've flown with them in California for several years and their service has always been considerate and very agreeable. And now I can add more reasonable to that list since I must fly with a checked bag and since I've arrived without my checked bag several times there is absolutely no way I'm flying without my carry-on.

Senator Schumer and five other senators have vowed to continue a legislation which would tax any airline who charged carry-on fees, until they have heard from all air carriers. Continental may not have commented since they are rumored to be planning a wedding with United, sorry, merger.

The More Hidden Changes:

In the past two years the majority of domestic carriers have cut seat capacity by a total of about 14.5 percent. The largest airline, American flew around 13.9 percent of the flights, during that same time, which means the airlines cut the equivalent of one company nearly the size of American.

They did this by cutting the number of flights, taking airplanes out of service and cutting down or totally eliminating some destinations.

Due to this measure, the planes are flying to near capacity, with more passengers involuntarily losing their reserved seats since there are less volunteers willing to take rerouted flights. If the airlines went back to being a bit more dependable they might get some of those volunteers back.

If you become one of those involuntary volunteers you are not entitled to any compensation if you are given a new flight within the hour of your original one. However if you have to wait an hour or longer the airline must pay you for the cost of your ticket and also depending upon the amount of time you need to wait, up to a total of $800.

Since the airlines are seeing that they have more control with this tactic they aren't showing a willingness to add any more seats at this point. The exceptions are Jet Blue and Air Trans who plan to have an increase in seating of 3 to 8 percent by the end of 2010.

Southwest cut flights last year and plans to add to that cut by the end of this year to a total of 8.4 percent.

Due to this strategy, even though less travelers flew last year, to the tune of around forty million for both domestic and foreign flights, the flights were much more crowded.

In another angle on dealing with the capacity problem Qantas and United decided to replace some business class seats with coach seats to the ratio of 33 coach seats for 10 business class. But the math doesn't add up, considering that a ticket for many of the Western European cities would cost in the neighborhood of $300 to $400 per coach ticket on the low end to as much as $1,800 and Business class tickets even when discounted cost from $2,500 to over $12,000.

Bonus; Quirky Change:

I'm not sure why the airline came up with this one. But it is different. New Zealand is introducing their"SkyCouch" in the fall for some of their flights. It's three coach seats in a row which have movable armrests and footrests that when activated fold out into small beds. The catch is, if less than three passengers wish to use this they must pay the cost of all three seats.

Additional Reading:

Tips on How to Deal with Going Through Airport Security

The Airlines' Latest Battle in the Luggage Wars

Changes in Security and Regulations that Affect Air Travel

Sources:

http://www.btnonline.com/businesstravelnews/headlines/frontpage_display.jsp?vnu_content_id=1004077116
2010 Corporate Travel Index: U.S. Corp. Travel Per Diems Hold The Line, Michael B. Baker & Jay Boehmer

http://joesharkeyat.blogspot.com/,5, Big Airlines: We Won't Try the Spirit Airline Stunt, April 18, 2010

http://www.abcactionnews.com/content/news/local/story/Five-airlines-wont-charge-for-carry-ons-senator/ZChkAZvliU6YxO2h2u4KEQ.cspx
Five airlines won't charge for carry-ons, senator says, Associated Press, 4/19/10

http://www.btnonline.com/businesstravelnews/search/article_display.jsp?vnu_content_id=1004082870
Carriers Resist Capacity Hike,Jay Boehmer

http://travel.yahoo.com/p-interests-34002773 ,10 Things Your Airline Won't Tell You

http://www.portfolio.com/business-travel/2010/02/03/carriers-roll-out-old-ideas-new-concept-to-lure-flyers-back/index1.html ,Empty Plane Syndrome, Joe Brancatelli Feb 03 2010

http://www.portfolio.com/business-travel/2010/04/28/passenger-bill-of-rights-governs-airline-behavior-for-flyers/index1.html ,The Protection Protocols, Joe Brancatelli