I realize that March has only just begun, but in the travel industry that means that now is the time to start planning your summer travel, a fact that is perhaps more true in 2012 than in previous years. There are a number of reasons why this is true:
1. The airlines have continued to reduce their capacity over the last three years, so there will be fewer discounted seats on each and every flight. This means that everyone will be paying higher fares this summer. Also, when there are flight disruptions due to weather or other events, it will take longer to re-accommodate everyone since there are fewer seats to work with.
2. There are signs that the economy is starting to rebound and travel is too. So the potential is that there will be more people flying this summer than the two previous summers. More people, mixed with the aforementioned reduced capacity, will result in crowded skies and higher fares.
3. Fuel prices are on the rise. Given that airplanes gulp down vast quantities of fuel, the slightest change in price then results in higher fuel surcharges that the airlines then pass along to consumers to cover the cost. Depending on who you listen to and what happens in the world, the price of fuel may jump from 25% to 200% this summer. For example, when Iran announced that it was cutting off exports of oil to Britain and France, the price of a barrel of crude jumped roughly 25%. Within 48 hours of that, a number of international carriers announced that they were going to be increasing their fuel surcharges between 10% and 15%. If that situation continues to worsen, it is very likely that speculation will drive the price of fuel up sharply. If this happens, expect airfares to follow.
So what should you do? Plan ahead and lock your prices in now while they are lower. Once your ticket has been issued, the airlines cannot come back to you asking for more money. But if the price drops after you purchase the ticket the airlines will refund the difference, less their administrative fee. This means that the drop in airfare would need to be significant in order to make it worthwhile pursuing that refund. However, the potential for savings is fairly significant if the pundits are correct about the price of fuel.