Travel industry braces for global downturn

Bombay News.Net
Sunday 29th June, 2008

Global tourism is facing heavy weather in the next year or two as fuel prices force up air fares, and contracting economies dampen consumer spending.

A number of airlines have already gone under, while others are cancelling flights, and reducing capacity. New fuel surcharges are becoming more common as well.

Australian carrier Qantas says the next financial year will see it paying an additional $2 billion for fuel.

The Malaysian government has told government staff to downgrade from 5 star hotels to 3 and 4 star establishments. It has also called on government departments to skip hotels and find alternative space for conferences and seminars.

Tourists are putting off vacations, restricting their length, and opting for shorter-distance destinations.

One of the major tourist spots for Americans and the Japanese is Hawaii. ATA and Aloha Airlines have recently gone broke, and as of next week two Japanese airlines will increase fuel surcharges on flights to Hawaii by 43%.

The top U.S. airline American Airlines will stop flying from Chicago to Honolulu at the end of this year.

Americans are finding overseas travel difficult on a number of fronts. One is a fear that their welcome has been worn thin in some countries because of the unpopularity of the Bush administration. Another is the record low in the value of the U.S. dollar, and thirdly, the cost of airline tickets is going through the roof.

The credit crunch, and concerns about inflation and the economy in many countries is resulting in cuts in corporate travel, while leisure travellers are shoring up their spending.

A sustained contraction in tourism will impact economies generally. Apart from the airlines and hotels, less travellers impact on restaurants, conference organizers, retail outlets, theme parks, souvenir shops, and tour groups. Entire cities and towns around the world have a major reliance on tourism, and are bracing for the fallout on their communities.

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