Consumers See Summer Travel as Essential but Look for Bargains

Despite earnings losses, carriers predict soaring demand as the United States enters the summer travel season.

Airlines’ summer flight forecasts range from rosy to hesitant after a disappointing holiday travel season, The Wall Street Journal (WSJ) reported in April. Southwest, for example, saw a quarterly loss of $159 million, which it attributed partly to a travel dip over January and February, but it said bookings had risen in March.

While the first quarter of the year is typically slow for leisure getaways, the revenue gap is historically closed by business travel, which hasn’t yet returned to its pre-pandemic pace. Challenged with rising fuel prices and labor costs as well as macroeconomic pressures, airlines are nevertheless predicting a return to positive profit margins into spring and summer.

Could sector players be on to something? As detailed in the latest edition of PYMNTS’ “How the World Does Digital,” they just might be.

Of the highest increases in digital engagement between the first quarter of 2022 and Q1 2023, travel-related activities take up two categories, with online travel information growing 11% and online airfare rising by 14%. Airlines may be picking up on this consumer wanderlust, driving sector optimism about the coming months.

And who can blame consumers for being bitten by the travel bug? Amid continued rate rises, 35% of consumers have sacrificed product quality by switching to cheaper, lower-quality goods to cut costs. With these financial pressures and the possible negative effects that may accompany them, it may be no wonder consumers crave a “great escape.”

The urge to get away has so far been beneficial to hotel reservations as well. Increased reservations led Booking Holdings CEO Glenn Fogel to remark during a Q4 2022 earnings call that “for the first time, we saw room nights across all of our major regions above 2019 levels for the quarter.” He added that Q4 activity led to “an all-time high” of nearly 900 million room nights booked on its platforms for full-year 2022, a 52% higher rate than the year prior.

The rising digital engagement of travel-related activities by a relatively large share of consumers hints at the importance of getting away from it all on many minds. Airlines seem to be betting on this sentiment driving demand as ticket prices rise as much as 40% year over year. Despite the many economic headwinds affecting other nonessential sectors, they just might be right.