What summer travel season reveals about US’ widening divide between haves and have-nots

Rising airfares and hotel prices are increasingly dividing America’s summer travel market between affluent travellers and cost-conscious households, as inflation and higher fuel costs reshape vacation plans across income groups, Reuters reported.The trend reflects a widening “K-shaped” consumer economy, where wealthier Americans continue to spend while middle- and lower-income groups cut back or delay discretionary travel.A recent Deloitte survey found that only 45 per cent of Americans had made summer travel plans this year — the lowest level in six years. The sharpest decline came from households earning between $100,000 and $199,000 annually, where planned travel dropped to 37 per cent from 45 per cent a year earlier.The pressure has intensified amid higher fuel costs linked to the US-Iran conflict since late February, pushing up airfare and operating expenses across the travel industry.Speaking at a Bernstein conference on Wednesday, American Airlines CEO Robert Isom said there was "no doubt" that travel demand was showing a K-shaped pattern, with higher-income travellers continuing to outperform middle- and lower-income consumers.Still, Isom said leisure travel demand remained "incredibly" strong overall.According to US government data, airfare rose more than 20 per cent in April from a year earlier, with airlines increasingly passing on higher fuel costs through fares and additional fees that disproportionately affect economy passengers.Travel companies said many budget-conscious consumers are responding by postponing bookings in the hope of lower prices, replacing international trips with domestic destinations or opting for cruise holidays and road travel packages.Outbound international summer bookings are down 25 per cent year-on-year, according to travel agency InteleTravel."There are people saying, 'Let me see how long I can wait to see if prices are going to drop,'" said Peter Vlitas, vice president at Internova Travel Group, Reuters quoted.The divergence is particularly visible between economy and premium travel segments.While economy fares have risen sharply, premium cabin fares have increased by about 7 per cent, making higher-end travel relatively more manageable for affluent travellers, InteleTravel CEO James Ferrara said.Recent college graduate and professional fencer Kamar Andreas told Reuters he cancelled a planned trip to Spain from Atlanta after airfare climbed to nearly $2,000, double his expected budget."I've been trying to see if prices will fluctuate before I book because some of the prices are absurd," Andreas said.Travel agents also reported cancellations and scaling back of expensive international itineraries.Independent travel agent Erika Bullock said roughly half the travellers who had planned to join a group tour to Bali and Thailand eventually dropped out."I know the flights had a lot to do with it, but then also planning going to Thailand and Bali, it's not a cheap trip," Bullock said.The divide is also becoming visible across the hospitality sector.Economy hotel demand has started softening, with some operators offering discounts to fill rooms, while premium hotels continue to see stronger demand growth."The young and underemployed are finding it increasingly difficult to gain a foothold," said Aran Ryan, director of industry studies at Tourism Economics, an Oxford Economics company. "But we’re still seeing an outlook for positive travel growth this summer."