High Airfares Slowing Travel Rebound
By Christina Cheddar Berk, CNBC News Editor
The corporate traveler is back, but high airfares are continuing to constrain consumer travel, according to Orbitz Worldwide (OWW) President and CEO Barney Harford.
"We're seeing a really good recovery, especially in corporate travel," Harford said in an interview Thursday on CNBC. "But generally, the travel industry is doing a lot better."
However, airfares continue to be high, potentially slowing the rebound in consumer travel, he added.
The average price of an airline ticket is up as much as 10 percent for travel within the U.S., and some 17 percent for international travel, Harford said."We are seeing ... a moderation in the increases in air tickets that we were seeing in perhaps May and June, where we saw some really stronger increases in air tickets," Harford went on to say. "We're hopeful that we'll see an increase in capacity in the airline sector, which will drive some moderation in (the price of) airline tickets." Airlines have been cutting capacity in recent years in order to get their costs under control after being hurt first by record-high fuel prices and then by a shrinking demand brought on by the recession. Even though conditions have improved, airlines have been slow to make changes. Still, there are bargains to be found. For example, Caribbean distinations are one of the best value spots, according to Harford. This is mainly because airfares to the region are flat with year-ago levels. Orbitz shares were trading higher Thursday after the company posted better-than-expected second-quarter earnings. Those results showed a 17 percent increase in the value of travel bookings compared with a year ago. At the moment, Harford said, travel to major U.S. cities is showing the strongest growth, as those are the locations most visited by business travelers. But considering that travelers are more focused on value, the company has been promoting its discount Web site CheapTickets.com with an ad campaign made cheaply through an online marketing effort where customers developed their own TV spots.
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