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Thursday, January 17, 2008

Travel Trends to Watch For: 2008

On the Map

What are the hot destinations of 2008? Well, with the dollar as weak as the early incarnation of Charles Atlas, it looks like a lot of Americans will be staying home. For those folks, national parks, Hawaii, California and Nevada will be hot spots. For those who look to venture further afield, the U.S. Tour Operators Association says Italy is numero uno among overseas destination for Americans. England is a distant second, according to the USTOA survey. In Europe, places like Croatia and Slovenia are among the hottest up and comers.

Travel by U.S. residents in the first nine months of 2007 was up eight percent to Central America and 7.6 percent to South America, according to the Commerce Department. I see both areas coming on strong, as they are both places where the U.S. dollar still buys something. Costa Rica, Belize and Panama are popular among eco-tourists, while Argentina and Chile are great alternatives for the person who loves Europe. Both offer sophisticated cities, great food and wine, diverse climates (from desert to mountain to seaside) and huge shopping bargains.

Where else in the world will Americans be traveling in 2008? For one, China, host of the Summer Olympics. For two, Quebec City. Despite the loony decline of the U.S. dollar against the Canadian loonie, the 400th anniversary of North America's oldest city will be worth a trip across the border. Off the beaten track places that are looking to grow tourism numbers include Greenland (view the glaciers before they melt), Indonesia and Vietnam (see Komodo dragons and Siamese crocodiles, respectively, before they go extinct), and Madagascar and Mozambique (where vacationers can volunteer to help conserve wildlife).

Top Travel Trends

It's easy being green when it comes to travel. More and more tour companies and hotel outlets are hanging out their green shingles. Whether claims are just that, claims, or whether companies are truly offering travelers a chance to travel with a light footprint--well, that is the question. While visitors may want to head to the Galapagos or Greenland to see nature in pristine form, they should be aware that their very vacations to such places may end up harming them.

Medical tourism--traveling to Singapore or South America for procedures ranging from open heart surgery to boob jobs--is definitely on the upswing. With insurance limits on what, or how much, is covered, Americans are opting to travel abroad to get better care at lower prices.

Living on the Edge: Okay, maybe Americans aren't ready to head to Iraq's Green Zone, but interest in exotic escapes like hanging with the remote tribes of Angola or the Amazon is definitely happening.

In the Air

After a year filled with extreme delays, stranded passengers and plenty of airline and security woes, travel in 2008 promises to have a few more bright spots -- but plenty of turbulence, too.
A weak economy and high fuel prices may end up reducing delays, if a lessening demand for seats and an increasing cost of petrol combine to cause airlines to cut schedule cuts.
Watch for demand on both federal and state levels for legislation designed to provide discomforted travelers during airline delays.

Going into Labor
: 2008 could be striking for labor issues at the airlines. Trouble may be brewing at American, US Airways, and United, to name a few.

Low Cost Carriers are about one-third of the U.S. industry. Their impact is even greater in places like Europe and Southeast Asia. The new carriers also have raised customer-service pressure on existing carriers -- some new entrants offer more in-flight entertainment, fewer ticketing restrictions and penalties, friendlier service and non-stop options not previously available. They've also introduced the idea of ala carte services, meaning passengers pay for reserving specific seats or checking bags. Mainstream carriers may opt to increase revenue by doing the same, albeit to a lesser degree (initially).

It's All Business: That's where the profit is and that's why airlines are looking to increase business and first-class offerings. In fact, there are now three carriers flying business-class only flights between the U.S. and Europe: Eos Airlines, Silverjet and L'Avion. A fourth, MaxJet, recently went belly up, but that does not necessarily bode badly for the others. With the Open Skies agreement in place between the U.S. and Europe (see below), the business class wars are likely to heat up. Both British Airways and Virgin Atlantic have announced plans for all-business-class services across the pond.

Merger Mania: Will Delta be united to United? Or will the fickle flyer finagle with Northwest? Stay tuned to the latest airline merger soap opera. Even airlines that choose to stand alone are likely to sell off assets and spin off subsidiaries like regional airlines and frequent flier programs.
Wi-Fi Sky High: Airlines are looking into in-flight WiFi with voice capabilities blocked so you don't have to listen to a seat mate negotiate a deal or argue with a spouse. Tests are under way at several airlines. American says it will have WiFi service this year (for a price) on most of its transcontinental flights.

The Skies Are Open: Treaty restrictions on travel between the U.S. and Europe will elapse at the end of March, meaning the skies over the Atlantic will be a free for all. A new Open Skies agreement will allow any European or U.S. airline to fly any route between any city in the EU and any city in the United States. Currently, European carriers are only allowed to fly to the U.S. on flights originating from their home country (Lufthansa/Germany; Alitalia/Italy and so forth).

There will also be more choices on flights to London, as the agreement allows a half-dozen carriers to add direct flights to Heathrow from Atlanta, JFK, Houston, Newark, Philadelphia, Dallas and Los Angeles. Heathrow accounts for 40 percent of transatlantic flights from Europe, but is only served by four airlines (United Airlines, American Airlines, BA and Virgin Atlantic). Even though slots remain scarce, opening up that venue to new competition could ultimately bring down prices.

What will the impact of Open Skies be? The agreement should increase translantic traffic and competition. Experts say traffic could increase by 26 million passengers per year, leading to a fare decrease of up to 15 percent. However, environmentalists on the European side of the pond are concerned about the extra traffic and increased emissions. Expect some protests.
The new Open Skies agreement effectively does away with the old European system of national flag carriers. As a result, EU airlines are likely to merge. With the termination of restrictive bilateral air service agreements between European national carriers and the U.S., airlines can merge without worries about losing access to the lucrative U.S. market. Weaker airlines like Iberia and Alitalia may be among the first to be snapped up by players like BA, KLM or Air France.

The US has retained two important concessions: EU airlines are not able to operate internal US flights and EU companies cannot purchase more than 25 percent of a US airline. The perceived one-sidedness of the agreement may be a topic for discussion during the next round of negotiations.

European Union spokespeople say new economic, social and cultural relationships -- in services, tourism and various products exchanged by the two regions -- will now open up, leading to the creation, in Europe, of 80,000 new jobs, and economic benefits worth 12 billion euros.

Passports/Western Hemisphere Travel Initiative

The State Department issued a record 18.4 million passports in fiscal year 2007, compared to 12.1 million in 2006. Thirty percent of Americans now hold passports, up from 27 percent.
The increase was spurred by new rules requiring passports for air travel to the U.S. from Mexico, the Caribbean and Canada. Mandates for passports for cruise and car travelers were supposed to be enacted this year. However, it looks like Congress will delay putting that requirement in place for another year. However, starting January 31, all U.S. and Canadian citizens must have more identification to cross the international border.Under a new U.S. law, all travelers, including children, who don't have passports must show proof of their citizenship at land and sea border crossings — a birth certificate or naturalization certificate — to re-enter the United States from Canada.

The land/sea passport requirement of the requirement of the Western Hemispheres Travel Initiative will now likely begin in June 2009. The birth-certificate/photo-ID requirement that begins at the end of the month is merely an interim measure. Passports were due to be required for all cross-border travel starting in June, including by land and sea, but that has been delayed a year after congressional and industry protests. Those were spurred by the lengthy delays last year in issuing passports, due to the increased demand after the air-travel passport requirement kicked in.