President Donald Trump’s decision to end the Iran deal could lead to higher travel costs this summer, financial analysts are reporting.
MarketWatch reports that the announcement that the United States would pull out of the Iran nuclear deal and resume sanctions against the country drove the overall stock market higher Wednesday, mainly on the strength of oil prices and shares in energy companies. Oil prices jumped to a three and a half year high, and energy shares were up 1.7 percent, making them by far the best-performing of the 11 sectors tracked by the S&P 500.
According to an analysis by Bloomberg, the surge in oil prices prompted many investors to sell off travel and leisure stocks due to the possibility that this would translate into rising fuel costs for airlines. Travel and leisure stocks dropped by as much as 2.1 percent following the announcement.
The Washington Examiner reports that rising fuel costs had already been prompting some carriers to raise fares ahead of the busy summer travel season. In the 12 months through April, the average price of oil increased approximately 46.5 percent, according to International Air Transport Association (IATA) data cited by the Examiner. Some low-cost carriers, such as Spirit Airlines, have already raised fares in response to the higher costs, prompting the possibility that larger airlines like American Airlines could follow.
At the same time, the potential for higher prices comes amid a number of positive economic signs for the travel industry. At its conference this week, major host agency Cruise Planners reported that 2017 was the strongest sales year in its history, and that, for the first four months of 2018, sales are up even more, by 34 percent, over last year. Overall, the agency is forecasting a total sales increase of 18 percent for 2018 over last year.
The travel industry has also continued to steadily add jobs over the past few months, outside of a slight dip in March. According to data from the Bureau of Labor Statistics (BLS), March ended a four-month run of gains in travel booking jobs that began in December as the industry began to recover from last year’s historic hurricane season.
The employment situation among travel agents has improved as well. In its report on 2017, Hot Travel Jobs found that overall employment among travel agents was up 2 percent last year, and the length of unemployment decreased as well.
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