Airlines seem to have regained the pricing advantage specially over business travelers according to many surveys for the first six months of 2010. On an average, fares have increased 8-10% over the same period of last year. With "deals" and "sales" vanishing, and once you add all those dreaded ancillary fees, the airlines are doing a better overall job managing their bottom lines. A closer look however reveals that the main reason is that airlines have "calibrated" their seat capacity (translation: reduced) to insure that planes are full and cutting off unprofitable routes.
So while the airlines pricing power is in the hands of the airlines for now and all things point to a recovery for the travel sector, hotels and car rental companies do not seem to be faring so well. Surveys show that the average hotel rates have decreased slightly for the same comparable period. Aairlines can "calibrate" capacity by reducing frequency and discontinuing routes, hotels cannot do so. They are affected by commercial real estate values and the fact that projects that were started before the recession had to be completed, bringing more and more inventory to market. The same is true to a lesser extent with car rentals. There is a round of consolidation going on and rental companies are able to reduce the size of their fleets of vehicles available for rent, But the fragmented nature of the business means that there are still relative bargains out there.
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