Travel Tips

As the Economy Tanks, Travelers Can Benefit

Locations in this article:  Paris, France

Crash car tireTalk about buckling your seatbelt for a bumpy ride.

It couldn’t get crazier on Wall Street with Lehman Brothers, Merrill Lynch and then AIG.

Wall Street is on a rollercoaster and it is going to continue.

There was a great story in The New York Times last week: A guy wrote in and said, “I am a student, I just graduated college and I have $92,000 in student loans, will you bail me out too?”

That’s right! We should all just line up with our problems at the Fed.

The only thing I worry about is inflation. In fact, the situation has been like in Zimbabwe, where the interest is raising exponentially daily. You have to show up with pounds of dollars just to buy a Diet Coke.

It’s so bad over there that the paper currency has expiration dates printed on them. Why did they do that? Well, in Zimbabwe when things get bad they just print more money.

And, what do you think we are doing? Where’s all this money coming from? That’s right, a little old, green-eyed guy on the printing press. It’s a short-term solution, but boy does it seem to be creating some long-term problems.

Now, we have all talked about the airlines being in trouble and the problem with the exchange rate of the dollar, nothing new. And now, with the price of gold only going up, the exchange rate is only going to get worse and the dollar is only going to get weaker.

THE SILVER LINING FOR TRAVELERS

Lightning stormBut there is a silver lining to it all in here. One is that there will be a rapid discount in high-end travel. You would never expect that to happen, but remember all those money-market guys, all those Lehman Brothers guys, who were planning their big ski vacations, I don’t think they are going.

This hits the hotels hard. It also hits Hawaii pretty hard, which has already been hit by the loss of two airlines there, which means the number of seats available to Hawaii are down. Already with the number of seat available down, people are canceling their trips, so over winter vacation, Hawaii is going to be on sale like you have never seen it before, at a time you have never seen it before.

The same thing is happening at other places around the country, but they will never call it a discount because they don’t want to use the big D word. What are they calling it? The deal is that you stay for three nights and you get the fourth night free, which is a 25 percent discount, but they just don’t want to call it that. The Four Seasons in Jackson Hole is going to do it. Hawaii is going to do it. Ritz-Carlton is going to start doing it.

You’re also going to see it in a place where the only time I ever saw them discount is after September 11, Walt Disney World! They almost never discount—only sometimes during low peaks they discount to Florida residents—but that’s the situation they are going into. They just announced that next year, if you show up to a Walt Disney World theme park on your birthday, you get in free. That is about a $69 discount.

Silver lining part two is that you’re going to start to see discounting on the not-so-frequently-flown routes overseas. Because, number one, it’s the fourth quarter and, number two, the airlines can’t just cancel their routes overseas because of bilateral agreements overseas with other countries. Here, if they decide to cancel a route to Toledo it’s not big deal, but overseas if they cancel a route to Paris they can’t get it back because someone else gets to have it.

If you have frequent-flier miles they are going to become less valuable over the days, weeks, and months to come, so now is the time to redeem them on flights to Europe and flights to Asia where the load factors are way down. On some airlines right now the passenger loads are about 42 percent—that’s nothing! Normally, at this time of year the capacity is only about 60 percent, but because of the 42 percent it is going to be easier to cash in those miles. So do not wait.

BUT EVERY SILVER LINING HAS A CLOUD

downward trendEven with everything else going on, fuel prices have been dropping. Does that mean the airlines and the cruise lines are going to stop all those extra charges? We’d better be the home of the brave because we have become the land of the fee and it is going to get worse. Even though the price of oil is below $100 for the first time in seven months, no one, airline or cruise lines, is going to back off, because once the fees are there, they are staying for a while.

Let me give you an example of what kind of money we are talking about here. Remember last week when Continental airlines announced last week that they were going to start charging $15 per bag to check them in? Other airlines charge more, as you know, but it’s $15 at Continental. This year alone they expect to generate $100 million alone in additional revenue just based on that one charge alone. So no one is canceling those surcharges or those newly introduced fees on how much it is to check your bag or curb check your bag or buy something on the plane, they are sticking around.

Now having said that, let’s leave it to the airlines. I am convinced that even if oil dropped to $30 a barrel the airlines would come up with a creative way to lose money. Even if they give oil away for free, the airlines would figure out a way not to make a profit.

While we are out there bailing out Fannie Mae and AIG, the airlines might want to think about begging the government again, because it is not going to get easier for them.

By Peter Greenberg for Peter Greenberg Worldwide Radio

Check out Peter’s Travel Detective Blog for more travel news and analysis.