Into the Crystal Ball: Travel Trends for 2015

Predictions are a fool's game, particularly in travel, where fads come and go on the winds of a good PR campaign or viral video. So let us forget about fads and talk about trends, those subtler and more substantial shifts in the paradigm that prove to be the game changers.
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Predictions are a fool's game, particularly in travel, where fads come and go on the winds of a good PR campaign or viral video. So let us forget about fads and talk about trends, those subtler and more substantial shifts in the paradigm that prove to be the game changers.

I caught up with Tom Spagnola, Senior VP of Supplier Relations for CheapOair, who has spent enough in the travel industry to winnow the wheat from the chaff. From what he tells me, 2015 is already a different creature from 2014. Across the board, in fact.

Fuel To The Fire
The biggest impact to the travel industry has nothing to do with technology or the latest app, but an economic slow-down in China. Why? One of the reasons fuel prices went through the roof was because emerging economies like China and India were taking more of a finite resource. While the Middle Kingdom is still the financial darling of the world, it is not moving up the ladder as quickly as it once was. With less demand, supplies go up, and prices go down. Pertaining to the airline industry. Spagnola sees a 5 percent overall drop in airfare.

"Fuel prices dropped about 45 percent," he observed, "and it's going to prompt airlines to take more of a risk in the form of adding more capacity in current markets."

With more gas, carriers can experiment with markets that they may have considered a few years ago but were cost-prohibitive. Spagnola sees a tentative experimentation by carriers, testing new markets for a single economic quarter or a seasonal type of program to see how they do and then gauge the results.

"If they are successful, they'll continue the capacity, and if not, the loss will be a lot less because of the fuel, which is about 25 percent of an airline ticket. There is less a risk of loosing money."

The All-Mighty Dollar
Speaking of money, anybody see how the dollar is doing lately? (Hint: Well.)

After six years of bloodletting and frantic staunching by the Federal Reserve, the USD began to rise last year, just as other currencies, most notably the euro, took a tumble. The euro, in fact, may be headed for even more of a roller coaster ride after Greece, whose sovereign debt set off the Eurozone crisis, voted in a government strongly opposed to the austerity measures the previous bosses passed to stabilize the freefalling Greek economy. Call it Machiavellian, but that is going to make a good chunk of Europe really cheap for travel-happy Yankees.

Going to destinations with weaker currencies is a travel trend that came and stayed; you make hay just by showing up. The Canadian dollar, Japanese yen, Australian dollar and Latin American currencies are weak against the greenback, and correspondingly, Americans be heading north of the border, or south of it, or so far away they won't be able to see it.

The Low Shall Rise
JetBlue in the United States, Ryanair in Europe, local players in the Caribbean -- low-cost carriers are on their way up in more ways than one.

"We are seeing a lot of increase in capacity from the low-cost carriers, which are now reaching out," says Spagnola. "Instead of just intra-Mexico and intra-Caribbean, we are now seeing their reach coming into the United States and Canada."

Yes, you can get your very own apartment on an Etihad flight, but the vast majority of travelers are looking to save money where they can, and these people, by their sheer numbers alone, the ones that provide carriers with the most profits. There is now such a demand for an increase in seats that the capacity for these carriers cannot do anything but grow.

"And we expect to see double-digit growth into Mexico and the Caribbean markets," Spagnola predicts. "It's expected on the whole for the Central American markets as well."

Cheap Business
But some travelers not quite so monied for First Class, but are equally put off by squeezing coach. Carriers are seeing growth potential in Business Class, and with a little fine-tuning, are making that option more affordable.

"What has been happening over the last few years is that that has been an abundance of using business class for mileage reward travel programs and reward programs," Spagnola explains. "That increase, maybe by 6 percent in 2015, has become a much more competitive part of the industry, and the airlines continue to evolve with their products. As the competition becomes more fierce on a product side, the price will become more competitive, which will be better for the business traveler."

This sets off a positive feedback loop. If airlines are trying to utilize their business class for revenue, rather than the loyalties mileage upgrades, it means more discount pricing. Spagnola sees a good discount business class price just a little bit above the higher Coach fare.

A Bundle of Joy
Travelers can also expect to save money on all aspects of their travel in the air and on the ground by "bundling" their products, such as car rental, hotel and flight.

"A lot of times, there is specific inventory that airlines, cars, and hotels are trying to distribute, not as a single product, but as a bundled product," says Spagnola.

And, typically, there will be better pricing on those specific contents. Consumers will be able to get reduced rates on a complete bundled package, which would be, say, and airfare plus car, or airfare plus hotel. Even better, this goes up and down the luxury scale. Combining two or three of the products will give substantial savings for your summer travel.

The Internet of Everywhere
A final trend, and one that shows some sticking power, is the reliance on mobile technology and apps. Airlines are so enraptured with them, in fact, that several good deals are offered only through those mediums.

Notes Spagnola, "The majority of growth is coming from mobile tablets, iPhones, and mobile apps. A lot of airlines are looking for other distribution channels to move some of their distressed inventory other than on the online sites directly."