Demand destruction...
The Federal Highway Administration said today that U.S. motorists cut their driving by 4.3 percent in March, the biggest monthly drop ever.
Gasoline Near $4 Shortens Trips for U.S. Memorial Day (Update1)
By Angela Greiling Keane
May 23 (Bloomberg) -- U.S. travelers are shortening their Memorial Day weekend trips or staying home as rising gasoline prices, costlier air fares and a weaker economy sap their confidence and bank accounts.
Restaurant manager Nirmal Acharya scrapped his plan to drive 300 miles (483 kilometers) to Chicago from Troy, Michigan, to see friends and family. Based on U.S. mileage estimates and gasoline costs, his Chrysler LLC Pacifica sport-utility vehicle would use about $135 in fuel, 19 percent more than last year.
``Gas prices play a big role when it comes to traveling five or six hundred miles,'' said Acharya, 27. He and his wife and 3-year-old daughter will celebrate the holiday in Troy.
His experience puts him among the 23 percent of Americans who pared or abandoned their weekend travel plans because of record gasoline prices, a survey by consulting firm Deloitte & Touche found. Among families with children under 13, 35 percent said they'd altered their travel.
``People are starting to have a little bit more concern about how much money they have,'' said Adam Weissenberg, the tourism, hospitality and leisure leader for New York-based Deloitte. ``People are opting for closer to home, and that probably will continue as the gas prices stay high.''
Driving Season
About 37.9 million people will journey at least 50 miles from home from today through May 26, according to AAA, the largest U.S. motorist group. The Memorial Day holiday, which honors the nation's war dead, unofficially heralds the start of the U.S. summer driving season.
While the traveler total is the second-highest ever, it's also 1 percent fewer than last year and marks the first drop since 2002, after the Sept. 11 attacks the previous year damped travel, AAA said. The Federal Highway Administration said today that U.S. motorists cut their driving by 4.3 percent in March, the biggest monthly drop ever.
Acharya said he would have made his Chicago trip had gasoline been selling for less than $3 a gallon. The U.S. average hasn't been that low since Feb. 15, according to Heathrow, Florida-based AAA. Since then, the price has risen 29 percent to a record $3.88 yesterday.
Surging fuel is adding to the strain on American households from job losses and the U.S. housing recession. The Reuters/University of Michigan preliminary index of consumer sentiment fell May 16 to the lowest level in 28 years.
Higher Prices
Gasoline and diesel-fuel costs also are being passed on in the form of higher prices for groceries and other goods, further burdening Americans' wallets. Food and fuel helped lead a 3.9 percent annual gain in consumer prices through April 30, half again as much as a year earlier, the Labor Department says.
``The retail outlets are standing in the way of you spending your money on travel,'' said David Castelveter, a spokesman for the Washington-based Air Transport Association, the trade group for major U.S. airlines.
Jim Wagner, 44, a physician from the Detroit suburb of Grosse Pointe, said rising gasoline prices won't stop him from driving 240 miles with his wife and two sons to the family's vacation cottage in Gaylord, Michigan.
``We may end up cutting back on how much time we spend out on the boat, though,'' he said.
To save money, Wagner said he planned to fill extra fuel tanks at a service station for his boat to avoid higher charges at the marina. ``We're more choosy when we buy groceries and gas, and we don't eat out much,'' he said.
U.S. travelers are still likely to face congested roads and airports over the Memorial Day weekend.
``People are still going to be traveling in spite of these economic conditions,'' AAA spokesman Troy Green said. ``Americans still want to enjoy their vacations. This is the unofficial start of summer.''
Crowded Planes
Air travelers probably won't see much relief from crowded jets and more-expensive tickets. Even with domestic demand little changed through April 30 compared with a year earlier, airlines are boosting fares and fees to counter a 94 percent surge in jet fuel in the past 12 months.
Flights out of New York's LaGuardia and Kennedy airports and New Jersey's Newark Liberty were delayed as of 10:38 a.m., according to the U.S. Federal Aviation Administration. The Kennedy delay is due to an air show.
The six largest full-fare airlines have raised prices 11 times since Dec. 20, according to discount-travel Web site Bestfares.com. They may not be able to do much more without risking a drop in traffic.
The Air Transport Association expects 1.3 percent fewer passengers to fly this summer as carriers reduce capacity 2 percent on U.S. routes. AMR Corp.'s American Airlines said this week it will cut domestic seating by 12 percent.
``Some people will opt not to travel or travel shorter trips,'' said David Swierenga, president of consulting firm Aeroecon in Round Rock, Texas. ``That will happen to the airlines and travel by cars.''
To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net
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