Wednesday, January 2, 2013

What the New Year will Bring

Another year gone...and another January 1 celebrated with champagne toasts, confetti, noise makers and good friends. In that moment when the clock hits midnight, the only thought running through most people's minds is the pure joy and revelry that comes with a New Year and a fresh start. And then reality hits, and we must face all the challenges and changes that are inevitable in the year ahead.

For the travel industry, there are certainly a lot.

While the overall travel experience is always unpredictable, consumers can count on higher costs in 2013. The price of airline tickets have been gradually climbing the last couple years, and airlines managed to raise fares seven times in 2012. Airlines may also keep charging more fees and reducing flight capacity, which will only increase the price of tickets more. Even with the price hikes, demand has remained solid, which means airlines have the freedom to keep raising prices, until people stop paying.

Airlines will hopefully take that extra money and put it towards buying new aircrafts or updating current ones with better amenities. Airlines will try to make the travel experience better through small changes like in-flight entertainment and connectivity, like onboard Wi-Fi. (But you have to pay for all that, remember.) One problem that travelers can expect to see with aircraft changes is the addition of more seats, which means less legroom or arm space and much more uncomfortable trip. The only way to get adequate legroom is if you pay more for it, as many domestic airlines offer added space in the first few rows of their aircrafts.

I imagine there will also be changes to frequent flier programs, as airlines look to gain more revenue and offer fewer upgrades, mileage earnings and rewards. The elite members will still receive impeccable service, I'm sure, but anyone who doesn't have that status will have to work extra hard to get the earnings they need to reach it. United has already raised its annual membership fees for its United Club. General members will pay $500 a year, up from $475; Premium Silver members who fly 25,000 miles annually pay $475; Premier Gold members who fly at least 50,000 will pay $450; Premier Platinum who fly 75,000 will pay $425, and Premier 1K members, who fly at least 100,000 miles a year, will pay $400.

It is likely we will see yet another merger in the airline industry as American Airlines and US Airways continue talks. In fact, industry experts believe an announcement could be made in the first quarter of the new year. If a merger happens, who knows what other consolidations will take place.

Travelers have become accustomed to the various fees tacked on by airlines for things like checking bags, buying in-flight food and purchasing television or Wi-Fi. However, this a la carte style is slowly moving into other industries, like hotels and cruises, as these markets look to take advantage of more revenue possibilities. Some hotels have started charging extra for room safes, luggage storage and mini-bar restocking. I wonder if there will be an added fee for turn down service or the chocolate on your pillow?

1 comment:

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