NEW YORK (TheStreet) - The economy is slowly recovering and, consequently, travel is becoming more expensive as airlines, hotels and car rental companies adjust their prices upwards. But five years into a tepid recovery from the Great Recession, it's unclear how much U.S. consumers can handle rising prices.
TheStreet will be investigating the impact of rising travel prices, particularly airfares, and we will present some investing trends to watch for this summer. The big question is: can consumers truly handle rising travel prices? This, after all, is no normal economy. Wages haven't recovered fully from the recession, and aggregate employment also remains depressed.
If some parts of the travel industry, for instance airlines, are passing over-burdensome costs onto consumers, it could impact other discretionary spending in restaurants, stores and the like. The airline industry is also benefitting from the pricing power that has come with an epic run of consolidation, which has shored up the balance sheets of companies like American Airlines (AAL), Delta (DAL), UnitedContinental (UAL), Southwest (LUV), and JetBlue (JBLU) but also cut flight capacity by nearly 25%.
Before breaking out our analysis, we want to know if our readers are actually feeling the pinch of rising travel prices.
If not, everything may be just fine for the travel, lodging and retail sectors. But if travel prices are rising, some unavoidable costs such as airfares could translate to spending reductions in other parts of the discretionary market such as lodging or retail.
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-- Written by Antoine Gara in New York.