19 December 2007

US Travel - Flat at best in 2008

We are seeing more signs of slowing in the economy. Unlike GWB the team at T2 does not believe that everything in the garden is rosy. We firmly believe that there is a real recession and it will bite hard for at least the first 2 quarters of 2008. Recovery won’t happen until after the election in November. Uncertainty is the watchword.

We are apparently not alone. We have already seen Q1 capacity cuts by the US majors. There will be a lot o planes on the ground undergoing maintenance. Further Forrester's Harteveldt put out a report 2 days ago pointing to the same theme from their large consumer panel. In their study they conclude that there is a likelihood of a cutback in spending but not in trip frequency. This will likely hit discretionary and upper end products. Perhaps shorter trips of lesser value rather than no trips.

We agree. We believe that the growth in US domestic market will come only from the cheap dollar with Canada and LATAM driving much of the pickup. It won’t however compensate overall. We see Hawaii taking a pretty big hit. despite new air service from such carriers as Alaska. Yields too will suffer in places like LV and Orlando.

Not a huge hit but definitely a reduction in growth. We are predicting a flat to slowing growth in the US market for 2008.

International NON-US market will be more robust but will also feel some of the same heat. More on that later



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