I’ve been reading quite a few panic ridden articles that Hawaii airfare has skyrocketed. Sure the airfare has increased recently. With Aloha and ATA Airlines bowing out of business, we all knew higher airfares were coming. The situation illustrates the classic economic’s law of supply and demand.
The good news is that the cost of Hawaii accommodations has become even more reasonable. If you’ve been following the deals that I share, you’ll notice I’ve posted some phenomenal deals. (I even seen hotel deals as low as $60 per day if you don’t mind staying several blocks away from Waikiki Beach.) I’m not the only one noticing this trend. Take a look at this excerpt from this LA Times article:
Fares to Hawaii climbed dramatically after Aloha Airlines went out of business and took nearly 100,000 available seats a month out of the West Coast market.
Now, travel agents say they’re seeing some of the lowest hotel rates in years.
“There are some surprising deals out there,” said Chris McGinnis, editor of Expedia Travel Trendwatch, in an online research report expected to be unveiled this week. “Because fewer people are flying to Hawaii, there are significant hotel discounts.”
According to the report, summer airfares are up nearly 18% on average, while hotel rates are down 26% in Maui and 17% in Oahu.
Let’s take a closer look at that last statement and crunch some math, nerdy engineer style. Here are the factors we’ll consider:
- Maui average hotel cost a couple months ago was around $280 per night, per my Hawaii news roundup on March 17th. The significance of this date is that it was just prior to Aloha and ATA going out of business.
- Maui hotel rates are down 26%. (To be honest, I think this estimate might be inflated a bit, but we’ll go with it because I think Expedia probably has a little more data to work with than I do. Okay, they have a lot more data than I have.)
- Airfare to Maui has increased by 18%.
- Let’s assume that the national average airfare to Maui was $725 prior to Aloha and ATA going out of business. (I’m basing the rate of $725 as an estimated national average. Rates from the West Coast would cost less, while rates from the East Coast would cost more. I’m also basing this number from my own experience)
Now that we’ve laid out the factors, let’s see how much the airfare increases really impact us.
- With rates being $280 in March and they are now projected to be 26% less – that results in a net daily rate savings of nearly $73.
- With airfare going up 18% and a previous average of about $725, the net airfare increase is nearly $131.
So, you can see where I’m going here. Let’s say you are going on a 7 night vacation to Maui, with the lower hotel rates, you’ll save a total of $511 ($73 x 7) while your airfare only increased by $131. In the end, you save $380 in this scenario! (This savings is based on a single traveler. Your savings will vary based on the number of people traveling in your party.) While I don’t believe these savings are absolute, I do believe that the increase in airfare is more than offset by the decrease in hotel rates. So don’t listen to Chicken Little, the Hawaiian sky is not falling. In fact paradise may be even cheaper than before.