Airlines say holiday bookings still strong
Sunday, October 26, 2008
ATLANTA -- Minneapolis business manager Roque Rossetti plans to make his annual trip home to Sao Paulo, Brazil, for Christmas. The 35-year-old said the sagging economy gave him no second thoughts about shelling out $1,200 for the ticket.
"If I wait longer, I'd probably pay more, and I might not end up going," he said. But, he added, "I'm secure. I don't have kids or a wife. My house is paid for."
Several carriers have said advance bookings show their planes are expected to be as full as or fuller than a year ago over the late fall and winter holidays -- largely because they have taken so many seats out of the air, a decision that was made when fuel prices were soaring. In fact, travelers who have not booked flights for the holidays could find it more difficult and expensive than usual to find the flights they want, when they want them.
Because of the capacity cuts, fuller planes do not mean more people will be flying. It also may be tougher for ski resorts and sunny vacation destinations to keep their numbers up, though some are offering promotions to lure holiday travelers who may be hesitant to open their wallets amid an uncertain economy.
"I think the consumer now has a lot of things on their mind -- they're concerned about the economy, they're concerned about the election, but I think they have already made the decision about what they are going to do over Thanksgiving and Christmas," said Arne Haak, chief financial officer of discount carrier AirTran Airways.
Haak said the carrier -- a unit of Orlando, Fla.-based AirTran Holdings Inc. -- has not seen a slowdown in bookings over the holidays.
"In fact, Christmas looks very, very good," he said.
The picture is similar at Atlanta-based Delta Air Lines Inc., an executive said.
"I think it might be the newness of the information," Ed Bastian, Delta's chief financial officer, said of travelers' response to the economic crisis.
He said most consumers are still trying to figure out what the crisis means to them. Bastian said Delta's domestic advance bookings for the holidays show stronger occupancy rates on a year-over-year basis and are in line with the carrier's expectations, though he noted capacity cuts may be playing a role in that. On the international side, he said November-December occupancy rates based on advance bookings are down, though he noted Delta is increasing capacity on overseas flights.
At American Airlines, a unit of Fort Worth, Texas-based AMR Corp., its occupancy rate based on advance bookings for the fourth quarter is down about 2 percentage points year-over-year, Chief Financial Officer Tom Horton said. That's "not outside of the norm you might see varying from year to year, but remember we are taking capacity out of the system," Horton said. The fourth quarter, which includes the holidays, is traditionally a slow period for airlines.
While he would not offer specifics for the holiday season itself, Horton suggested the carrier was not expecting a big drop-off in sales during the time period.
"I don't see anything unique to the holiday period right now," Horton said.
A big change may be that, with the economy suffering, people are looking for better deals.
During a recent stop at Minneapolis-St. Paul International Airport, Georgeann Becker, 60, an attorney from a suburb of Denver, said she and her husband paid for a plane ticket for their daughter to fly home from New York to visit them this Christmas. Her daughter shopped around at the online travel sites and found a cheaper ticket than their travel agent, at around $350, which the Beckers are paying.
"I don't know that we're necessarily holding back. I think you do go out of your way to find the cheapest ticket," Georgeann Becker said.
Esmeralda Perez, a spokeswoman for the Puerto Rico Hotel & Tourism Association, said travelers appear to be waiting to book their vacations until closer to the holidays.
The island's hotels and resorts are being more aggressive with promotions and packages than in past years to lure last-minute guests, she said. The government-sponsored Puerto Rico Tourism Co. has doubled its advertising and marketing spending as well.
Perez said the election in November may also be adding to the broader economic uncertainty. In past election years, she said hotels have seen a surge of holiday bookings after the election.
Cayman Islands Tourism Minister Charles Clifford said cutbacks by carriers within the U.S. have pushed up fares to the islands. In response, Cayman Airways is adding nonstop service from Washington and Chicago to the British dependency beginning in December.
Ski.com, which books vacations at 80 resorts in the western U.S., Canada, Europe and South America, has seen sales slip compared to last year, said spokesman Dan Sherman.
As of September, Vail Resorts Inc. Chief Executive Rob Katz said the number of Colorado season passes sold was down 8.4 percent. Advance lodging bookings through central reservations were down 17.7 percent in room nights over the same period last year.
Recently, the company announced a slate of new promotions, including offering a free night to guests who book a five-night stay or more on dates around Thanksgiving, Christmas, New Year's and other major holidays in 2009.
Katz expects the company's marketing message to penetrate following the election. "I think we will potentially see a different environment by Thanksgiving than what we're seeing today."
Andy Wirth, the chief marketing officer of resort owner Intrawest ULC, said consumers seem to be favoring ski destinations within driving distance this year, although he noted that airline capacity has held steady at the three airports that service its western resorts.
He is optimistic about a major marketing push planned for shortly after the election in November. "The destination skiing customer is a very resilient customer base," he said.
Alain Brochu, a vice president of Intrawest's Mont Tremblant in Quebec, said the resort is seeing increased sales from promotions targeted to individual travelers so far this season. He said one strong seller is the $129 pass, good for 3 days of skiing.
"Preliminary results indicate that adapting to the market rather than trying to change it has generated good response," he said in an e-mail.
Airlines are not sure how long demand will hold up for them, and several expressed concern recently that demand will drop off in 2009 as the realities of a recession set in for more travelers.
AirTran's Haak said "obviously that is something we're going to keep an eye on."
AP Business Writers Joshua Freed in Minneapolis and Catherine Tsai in Denver contributed to this report.