Lower gas prices, pent-up demand could rev up travel for holiday season

With concerns about the COVID virus starting to subside and gas prices tumbling from summer highs, experts expect a brisk travel season in the final months of the year.

Even with the possibility of a recession looming, there’s still pent-up demand for travel as people put off plans in 2020 and 2021 because of the pandemic and then were stymied this summer by gas prices that reached record levels.

Whether it's by car or by plane, experts believe there will be lots of people traveling over the next few months.

"The average family is still ahead, even with inflation," said Michael Hicks, an economist at Ball State University. "At the end of the day, people are going to travel during the holiday season. If there's going to be cutbacks, it's going to be in other areas."

Prices finally abating:Dropping pump prices providing some relief for inflation-battered consumers

At the beginning of June, gas reached an average of $5.23 per gallon in the South Bend area, according to GasBuddy, which provides real-time pump prices in the United States and Canada.

But since then, prices have been moving downward and have been hovering around $3.75 per gallon, a considerable drop compared to summer but still about 40 cents higher than it was a year ago.

Experts say that demand softened when motorists opted to curtail or shorten summertime trips. At the same time, the Biden administration has released oil from the nation’s strategic reserves in an effort to bring down prices.

In addition, discounted Russian oil has found its way to the market ― even with sanctions ― and a variety of issues that have impacted production at U.S. refineries are beginning to get worked out, said Patrick De Haan, head of petroleum analysis for GasBuddy, though there are still problems with diesel fuel refining capacity.

Barring a late-season hurricane or some other issue that could impact prices, gas prices should remain in the low- to mid-$3 range in the final months of the year and through winter, De Haan said.

“I think the worst is behind us,” he said. “The spike was largely caused by speculation. And with the recent drop in prices, I would think that holiday travel will be strong this year.”

The AAA club is still a couple of weeks away from issuing its annual predictions for holiday travel. But the auto club reported that travel was within about 5% of pre-pandemic levels last year and there’s little reason to believe it won’t get back to 2019 volume this year, said Molly Hart, spokeswoman for AAA – The Auto Club Group.

“With gas prices stabilizing, we anticipate there will be a lot of people on the road for the holidays,” Hart said, adding that the auto club also doesn’t see any indication that gas prices will be spiking anytime soon.

Based on past behavior, AAA has predicted that motorists will see the busiest roads on the Wednesday afternoon before Thanksgiving as visitors head off to destinations. At times, motorists could see double and triple the normal volume of traffic on major highways.

Air Travel

And that Wednesday likely also will be one of the busiest days of the year at the South Bend International Airport, especially since mask mandates have been lifted for passengers and crew, even though the CDC still recommends using them.

“I think there’s still some pent-up demand,” said Mike Daigle, the airport’s CEO and executive director. “When it comes to the holiday, people still want to fly off to destinations or to visit family members.”

Last holiday season, the airline industry experienced an even bigger rebound than car travel because aviation took a more dramatic nosedive during the height of the pandemic in 2020. But the rapid recovery following the pandemic also exposed a shortage of pilots that had been developing but was exacerbated by the pandemic.

“The industry responded by parking smaller aircraft all over the country and pulling some service,” Daigle said, adding that available pilots and crew were used to larger capacity aircraft so that airlines could better keep up with demand.

South Bend, in fact, is set to lose its popular service to Detroit effective Nov. 9 that was provided by Delta Air Lines. The Detroit hub served as a gateway to the Northeast and overseas.

Because of the competition for flight crews, South Bend lost the flight, even though it was always very full, Daigle said.

Flight reduction:Delta cancels service from South Bend to Detroit beginning Nov. 9, citing pilot shortage

"We know that capacity will be limited through the rest of the year,” he said. “But the industry is working diligently to solve those problems. Each has taken steps. They’re all doing something.”

Among other things, airlines are aiming to get their pilots the training needed to move into larger aircraft and also are working with Purdue and Western Michigan universities, among others, to help prospective pilots with the cost of education.

Daigle believes those problems will gradually ease and suggested that those interested in air travel over the holidays should book their flights early because of the high demand and tighter supply of seats across the country.

Though the area didn’t lose the Detroit service through lack of support, Daigle suggested that customers who enjoy the convenience of local air service should continue to fly out of South Bend because that will help it regain service when airlines are in a position to add service.

“We’ll be able to go after more service or bigger planes,” he explained.

Looking beyond the holiday season, Hicks doesn't see anything even through the first half of 2023 that could have much of an impact on travel, barring any unforeseen world events. Though gas prices could again start going up toward the start of the summer travel season, he doesn't believe any looming recession will be that severe.

"Most recent predictions are that the economy stops growing toward the end of the first half," Hicks said. "There's a very real possibility of a recession, but it wouldn't be very severe with a widespread impact."

Email Tribune staff writer Ed Semmler at esemmler@sbtinfo.com.

This article originally appeared on South Bend Tribune: Holiday travel is likely in the forecast for South Bend area residents