Get ready for the most expensive travel season ever

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CNN business

For travelers preparing for their first vacation trips since before the pandemic, prepare for sticker shock.

Airfares are high. Gas prices in the US are at their highest this time of year. Hotel room and rental car prices are up 12% and 46%, respectively, from 2019.

The good news is that prices for airline tickets, gas and hotel rooms have fallen below record highs set in early 2022, but they are still among the highest on record this time of year. Only car rental prices are lower than what travelers were paying late last year, although they are still well above pre-pandemic levels.

Here’s what will cost travelers more this holiday season:

As air travel nearly ground to a halt in 2020 due to the pandemic, US airlines shed staff through early retirement and payroll packages. Staffing levels are now approaching pre-pandemic levels at most airlines, but the number of flights and seats available has not returned to those levels.

Data from aeronautical analysis firm Cirium shows that the number of flights scheduled for November and December fell by 15% compared to the same months in 2019. Many of these missing flights were previously flown by smaller regional airlines serving smaller airports, and some of these airports have since lost service altogether. But even with a higher share of flights on larger aircraft, the number of available seats has decreased by 3.5% compared to the same period in 2019.

A surge in Covid cases in late 2021 weighed on holiday travel demand, but this year it’s positively resilient, according to airlines and industry experts.

“Vacation travel is back as strong as ever, and vacation travel is the reason this recovery has bounced back,” said Scott Keyes, founder of travel website Scott’s Cheap Flights. “So many people wanted to travel over Labor Day and the Fourth of July, and as we’ll soon see, Thanksgiving and Christmas.”

And that combination—strong demand and a tight supply of seats—means high fares.

The average fare is up about 40% from 2021, with leisure travelers paying an average of $289 each way, according to a fare tracker compiled by Wall Street analysts at Cowan.

But the tariffs are not only higher in comparison to pandemic prices.

Travel site Hopper says airfares have gone up 7% compared to the same period in 2019 and up 17% when comparing fares for those who waited up to a week before Thanksgiving to book a flight.

“Holiday travel is definitely more expensive than it has been in years past,” said Hayley Berg, Hopper’s chief economist.

Of course, most leisure travelers never board a plane — They drive. AAA estimates that 49 million will travel by car over the holidays, compared to 4.5 million who fly. And for these drivers, gas prices are far bigger concern than air fares.

The good news is that the price of a gallon of regular gasoline nationwide is well below the record $5.02 set in June. AAA reports that Sunday’s median was $4.67, down 27%. And prices continue to fall — the average price is down 11 cents a gallon in the last week alone.

But prices are still 8% higher than this time last year. At the end of the year, often just before Christmas, the gas price typically reaches its seasonal low.

Also with the annual increase in holiday trips, car travel decreases in November and December is usually well below the summer driving season. And numerous factors are driving global oil and gasoline prices to historic highs this year. Chief among them is Russia’s invasion of Ukraine, which triggered sanctions on Russian oil. US refining capacity, which fell during the pandemic, has yet to recover.

Sunday average price for a gallon of gas is 46% higher than the average price on Nov. 20 over the past 20 years, according to data from OPIS, which tracks gas prices for AAA.

Hotel prices are also higher than ever at this time of year. The consumer price index, the government’s main indicator of inflation, shows that the cost of out-of-home accommodation hit a record in May and the October average, the latest available, is just 2% below that peak.

Rates are up 6% year over year and up 12% from October 2019. While the CPI doesn’t report average rates in dollars, Hopper put the average hotel room rate over Thanksgiving weekend at $189 and over Thanksgiving weekend at $218 Christmas week.

Once again, strong demand and tighter supply – some hotels have not weathered the pandemic, others are still struggling to find the staff they need to fully reopen – are driving prices higher.

Rental car companies reduced their fleets in the early months of the pandemic, selling the cars they needed to raise cash. With automakers still not returning to full production due to a shortage of parts needed to build cars, including computer chips, it’s taken rental car companies a while to replenish their fleets to meet demand.

The good news is that October CPI data shows rental car prices are down 3.5% from October last year and 15% from the June 2021 record. Still, rental cars are 46% more expensive than they were in October 2019.

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