Record-high gas prices have already hit certain parts of the country. The national average is creeping closer and closer to $4 per gallon, with steady increases expected for the months ahead. Soaring fuel costs and consolidation in the airline industry have brought about a surge in flight prices, while hotel prices have spiked recently as well. All of these factors make the argument that if money is tight in your household, it’s wise to vacation this summer close to home, or perhaps without even leaving home.
Remember the “staycation“? In 2009, when recession concerns reached their peak, the term came into widespread use, referring to the practice of staying home (or close to home) as a money-saving alternative to the traditional vacation involving a flight or long road trip.
Rising gas prices may bring on a staycation sequel in 2012. For the most part, increased prices at the pump haven’t changed Americans’ behavior all that much yet. Consumers are more apt to be buying smaller, fuel-efficient cars, and there are some indications that people are driving a bit less.
As the price of a gallon of regular hits $4 and beyond, surpassing even $5 in some cases, though, the likelihood increases that behavior will change. The chances that gas prices will go higher than what was previously anticipated are also high. The gas-price-monitoring site GasBuddy recently revised its forecast. Its experts originally predicted the national average would top out at $3.75 to $4.15 per gallon, but now they expect prices of $3.95 to $4.35, most likely sometime in May.
There are indications that Americans have already tweaked their travel plans in anticipation of high gas (and flight) prices. Citing a U.S. Travel Association survey, USA Today reported that 54% of American leisure travelers say higher gas prices will affect their travel plans. Of those who plan on driving to vacation destinations this summer, 44% said they’d take fewer trips because of gas prices, while more than one-third indicated they’d be driving to closer destinations to save on gas.
Flight data rounded up by the Los Angeles Times, meanwhile, shows that Americans are less interested in going abroad this summer due to the soaring price of international airfare. Searches at Kayak.com for spots such as Los Angeles, Las Vegas, San Francisco and Hawaii have risen substantially, while searches for Rome and London are down 65% and 40% respectively, compared with this time last year. Overall, prices for international flights in the summer of 2012 are up 11% compared with a year ago.
Flight prices within the U.S. are on the rise as well. According to Businessweek, crude-oil prices have increased 30% in the past six months, and rising fuel costs have been passed along to airline passengers. Average flight prices are nearing all-time highs hit prior to the recession — and mind you, those earlier highs were reached when the price of a flight included checked baggage, seating assignments, food and other perks that passengers usually must now pay for à la carte.
Southwest Airlines recently raised fares $4 to $10 on flights, and most of the competition matched the price hike. Rick Seaney, who makes a living analyzing flight prices for FareCompare.com, said that he expects to see three or four more such fare hikes before summer’s peak travel season begins.
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That’s why the advice in an Economist post probably makes sense: if you must fly this summer, it’s probably best just to book the flight now and get it over with. In all likelihood, fares are only going to get more expensive as peak season approaches.