Summer outlook weakens

Brad Foss

Friday, March 28, 2003 | 10:52 a.m.

The first full week of fighting in Iraq caused sharp declines in springtime travel bookings. Now industry officials are crossing their fingers for a quick end to the war in Iraq so that the slowdown in trip planning does not carry over into what is traditionally the busiest time of year for leisure travel.

"The big question is whether we're going to be able to salvage the summer season," said Kimberly Wilson-Wetty of Valerie Wilson Travel in New York, summing up the fears of travel agents nationwide.

The immediate outlook for the travel industry does not look bright, with airline passenger traffic down 10 percent from a year ago and US Airways on Thursday joining other major carriers in reducing domestic and international flight schedules in response to the war. The airline industry, which has cut thousands of jobs in a matter of days, has made the threat of more bankruptcies the crux of an intense lobbying campaign on Capitol Hill, where a multibillion-dollar financial aid package is under consideration.

Domestic air travel bookings for the next 60 to 90 days have fallen by 20 percent, and international bookings for the same period are down by 40 percent, according to the Air Transport Association, a Washington-based trade group.

That's bad news for the car rental industry, which relies on airport reservations for roughly 60 percent of its business, according to Neil Abrams, president of Abrams Consulting Group in Purchase, N.Y.

Car rental outlets outside of airports could pick up some incremental business, though, if Americans decide to travel closer to home, as they did last summer, out of of concern for their personal safety and financial well-being. Rental car companies might also pick up some corporate clients traveling shorter distances -- say Los Angeles to San Francisco or New York to Boston -- who prefer a drive to a flight in these uncertain times, he said.

"It's really a very unpredictable situation right now," Abrams said.

Bryan Leibman, president of Houston-based Frosch International Travel, said he's experiencing greater financial turmoil now than immediately after the terrorist attacks of 2001. Since then, airlines have eliminated travel agents commissions, corporations have curbed travel budgets and leisure travelers have gravitated to online agencies in search of discounts.

Despite more lenient cancellation policies since the war began, Leibman said would-be travelers are reluctant to put down deposits for air and cruise travel. "There seems to be a hesitation, a waiting period, in terms of booking for summer," he said.

The timing of any resolution to the war is of great concern to Wilson-Wetty and her peers because airline, cruise and hotel bookings by leisure travelers are typically made at least one month in advance. And if the first Gulf War is any indicator of how consumers will behave this time around, demand for leisure travel will not come back as fast as it does for corporate travel.

As a result, the further the military conflict extends into spring, the less likely it is that families, retired couples and college students will be making ambitious travel plans for Memorial Day -- the official start of the summer travel season -- and beyond.

"If the war ends sometime fairly soon, then we have time for people to make vacation plans," said Bob Whitley, president of the U.S. Tour Operators Association, which represents more than 140 companies.

Whitley said member companies are reporting that bookings are 30 percent below year ago levels; group tours have proven to be particularly sensitive, he said.

For the time being, customers are inquiring about refund policies in the event they want to cancel a trip and they're also doing research about where the best bargains can be found, a trend Whitley called "encouraging."