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July 4 travel hitting a record thanks to lower gas prices, humming economy

Travelers heading out for the July 4 holiday can expect plenty of company this year.

Nearly 71 million people will be on the move over July Fourth week, according to AAA — a record that exceeds even pre-pandemic totals.

“With summer vacations in full swing and the flexibility of remote work, more Americans are taking extended trips around Independence Day,” Paula Twidale, senior vice president of AAA Travel, said in a statement. “We anticipate this July 4th week will be the busiest ever with an additional 5.7 million people traveling compared to 2019.”  

About 60.6 million people will travel by vehicle over the holiday, AAA said. That's up nearly 5% from last year. At $3.51 a gallon, gas prices are slightly lower than they were this time last year, when they hit $3.54. Given that inflation has climbed more than 3% over the period, the cost effect for drivers is even greater.

Air travelers are also expected to set a record, with AAA projecting 5.74 million people to fly to their July Fourth destinations, up 7% from last year.

AAA booking data shows that domestic airfare is 2% cheaper this Independence Day week compared to last year and that the average price for a domestic round-trip ticket is $800. 

The booming travel figures are further reflected by the Transportation Security Administration’s screening data, which last week set a daily record of more than 2.9 million flyers processed.

The U.S. economy is slowing but still showing signs of solid growth. The Commerce Department said last week that spending on travel, restaurant meals and other services rose at a 3.3% rate in the first quarter of the year, a still-firm rate that is occurring against decelerating inflation.

Rob Wile is a breaking business news reporter for NBC News Digital.

Watch CBS News

July 4th gas prices expected to hit lowest level in 3 years

By Megan Cerullo

Edited By Anne Marie Lee

Updated on: July 2, 2024 / 2:15 PM EDT / CBS News

Low gas prices are something for drivers to celebrate this July 4th, with costs at the pump expected to hit their lowest levels since 2021. 

The average price of gasoline on Independence Day is expected to be $3.49 per gallon nationwide, the lowest price it's been on the busy travel holiday in three years, according to GasBuddy , a fuel savings platform. 

That could mean serious cost savings compared with a few years ago for the 60.6 million motorists who are expected to travel by car to celebrate the federal holiday , according to AAA .

Last year, this national average price of gas was $3.50, just a penny higher than this year's projected price. In 2022, the average cost of gas was more than $1.30 higher than it's expected to be this year, driven up at the time by Russia's invasion of Ukraine in February which caused oil prices to spike. 

Where gas is cheapest

Gas prices have ticked upward slightly since the beginning of June, when they fell to as low as $3.39 per gallon.

Still, in some states fuel costs are significantly lower than the current national average. In Washington, average gas prices are down 71 cents a gallon compared with one year ago. 

"For those hitting the road to celebrate Independence Day, gas prices have seen modest recent fluctuations, but most states are seeing prices near or even well below where they were a year ago," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement. 

But De Haan warned that hurricanes and other tropical weather events could disrupt refineries and cause prices at the pump to spike later in the summer. 

"While the first half of the summer has been relatively smooth sailing, the road ahead may be bumpy. Activity in the tropics has increased, and projections remain for a very busy hurricane season. Even after the holiday fireworks are over, we'll be watching for any potential fireworks at the pump that could be brought on by hurricanes disrupting refineries," he said. 

How to save on fuel costs

For motorists looking to save money on upcoming road trips, there are ways to minimize gas usage while driving. 

• Accelerating hard wastes fuel, while accelerating gently saves gas. Toyota offers this tip : "Aim to take about five seconds to accelerate your vehicle up to 15 miles per hour from a stop," the automaker said. 
• Sudden changes in speed can increase gas consumption by up to 30% on the highway, so aim to drive at a steady pace, Toyota added.
• Progressive, the insurance company, adds that newer cars tend to be more fuel efficient than older models. A quick tuneup to clear your vehicle's clogged air filters will also enable more efficient fuel consumption, and potentially help you save on gas costs.
• Check your tire pressure, as underinflated tires can lower your fuel efficiency. 

Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.

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Wave of summer travel expected over July Fourth holiday as hot inflation loosens grip

FILE - Travelers line up for security clearance at Hartsfield-Jackson Atlanta International Airport on Friday, June 28, 2024, in Atlanta. Travel activity is expected to heat up to record levels around the Independence Day holiday as consumers take advantage of cooler prices for airfares, gasoline and hotels. (AP Photo/Pablo Martinez Monsivais, File)

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NEW YORK (AP) — Travel activity is expected to heat up to record levels around the Independence Day holiday as consumers take advantage of cooler prices for airfares, gasoline and hotels.

AAA expects a record number of people to hit roads and airports during the week between Saturday June 29 through Sunday, July 7. The motor club forecasts that roughly 70.9 million people are planning to travel, the most since before the pandemic.

The hot travel forecast comes amid broader worries that consumers are becoming more cautious on spending outside of necessities, which is a key factor to a cooling economy. Inflation has eased significantly from its peak in 2022, notably on costs for travel and vacations.

“With summer vacations in full swing and the flexibility of remote work, more Americans are taking extended trips around Independence Day,” said Paula Twidale, Senior Vice President of AAA Travel.

The forecast, along with encouraging financial updates from cruise lines, bodes well for a sector that would typically suffer if consumers start cutting back on discretionary items and services.

Airports are seeing record numbers of travelers this summer. The Transportation Security Administration screened nearly 3 million people at U.S. airports June 23, an all-time high. The agency expects the number of air travelers to surpass 3 million at some point over the July 4 holiday week.

Consumers continue to face pressure from inflation on a wide range of goods, but travel-related items including airline tickets and hotel costs have eased significantly from a year ago. Hotel room prices were 1.2% lower in May compared with a year ago, according to recent government inflation data. Those costs have been trending lower since the beginning of the year.

Gasoline prices, which can have an outsized impact on consumer budgets, have generally eased from a year ago. Regular gasoline prices currently average $3.51 per gallon nationally, down 2 cents from a year ago, according to AAA.

Delta Air Lines, American Airlines, Marriott, and Hilton will likely be the biggest beneficiaries of consumer demand for travel this summer, according to Morgan Stanley. Still, the “rising tide of demand should continue to lift all boats,” the report said.

Cruise lines are also poised to benefit. Carnival recently raised its profit forecast for the year and said bookings for 2024 are the best on record in terms of both price and occupancy. It said total customer deposits reached an all-time high of $8.3 billion during its fiscal second quarter and it expects capacity to grow 4.8% in 2024. Competitor Royal Caribbean has also raised its forecasts for the year.

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• Yuri Gagarin Cosmonaut Training Center
• Central Museum of the Air Forces at Monino
• Peter the Great Military Academy
• Bykovo Manor
• Balashikha Arena
• Malenky Puppet Theater
• Balashikha Museum of History and Local Lore
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• Orekhovo Zuevsky City Exhibition Hall
• Ramenskii History and Art Museum
• Noginsk Museum and Exhibition Center
• Saturn Stadium

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California gas prices rise 2 cents a gallon based on CPI

LOS ANGELES (KABC) -- California gas prices are rising due to an annual tax increase that took effect Monday.

The state's gas tax is going up by two cents, increasing to 60 cents per gallon. So, drivers filling up a 12-gallon tank will spend about an extra quarter.

California's gas tax rises annually based on the Consumer Price Index. It is the highest of all states, surpassing Illinois, Pennsylvania and Indiana, according to the Tax Foundation .

According to CalTrans, the excise tax pays for 80% of highway and road repairs.

Some Republican legislators were speaking out about the change, saying the tax has become too much for drivers to bear.

"In what is now a tradition in Gavin Newsom's California, today marks yet another July 1 increase to our state gas tax," Rep. Michelle Steel, R-Cypress, posted on X. "Californians are suffering enough under Biden and Newsom's inflation. Now, their tax hikes are making it unaffordable to drive."

On average, Californians pay roughly $300 a year in state gas taxes.

Gas prices have slowly decreased, averaging about $4.78 a gallon in L.A. County. But the Auto Club expects prices to increase for the July 4th holiday.

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Airlines got too confident, and now they are paying the price despite record-breaking travel

• Despite booming travel, airlines are struggling to turn a profit.
• Southwest expects seat-mile revenue will decline up to 4.5%, while American predicts up to 6%.
• Experts blame fewer last-minute business travelers, overcapacity, Boeing delays, and inflated costs.

Making money in the airline industry has never been easy.

It's a capital-heavy business with the constant need to expand and innovate while simultaneously managing ever-changing demand and costs.

Expensive fuel, maintenance, and labor don't help, nor do unpredictable setbacks outside the airline's control, like pandemic travel bans and production slowdowns at planemaker Boeing.

Despite the challenging environment, 2024 is still set to see record-breaking passenger numbers, according to the International Air Transport Association, or IATA ,

With so many people traveling, US airlines were poised for success. Some, like Delta, have found it. But across the industry, many airlines are struggling to turn profits thanks to issues like overcapacity, unrelenting competition, and unexpectedly high costs, according to experts.

Take Southwest, for example, which in June cut its forecasts and now expects revenue per seat mile — a key financial metric for airlines — to fall by up to 4.5% where it had previously expected 1.5% to 3.5%.

Before that, American in May warned it expected the same metric to fall by 5% to 6% compared to last year. Its earlier prediction was 1% to 3%.

Across the board, airlines have trailed the benchmark S&P 500 index with more debt than the average publicly traded company and thinner margins.

Airlines got overambitious with their expansion plans

Travel analyst Henry Harteveldt told Business Insider that thinning margins are, in part, because airlines added too much to the market too fast amid confidence in the soaring demand and now can't sell all of those seats.

Reuters reported American hurt its pricing power after aggressive growth in its domestic market. The airline also missed out on revenue from corporate customers due to a flawed ticket sale strategy it has since admitted was a mistake to adopt.

"We're seeing softness in customer bookings relative to our expectations that we believe is in part due to the changes that we have made to our sales and distribution strategy," American CEO Robert Isom said during a May conference.

Southwest also cited its struggle to predict demand as part of its revenue problem. And, unlike ultra-low-cost carriers , Southwest doesn't charge extra for ancillaries like bags or seats — another missed revenue opportunity.

In fact, activist firm Elliott Investment Management recently pumped nearly $2 billion into Southwest, questioning strategies like its lack of add-on fees and calling for a board shake-up and the firing of Southwest CEO Bob Jordan.

Business travelers are booking fewer last-minute premium-priced tickets

Part of the industry's overcapacity problem is because lucrative business travel still hasn't completely rebounded since the pandemic, Harry Kraemer, former CFO and CEO of healthcare firm Baxter International, told BI.

Corporations aren't spending as much on last-minute business travel since the pandemic made Zoom and Google Meet more convenient.

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"Half of the market is gone, and it's their highest margin," Kraemer said. "You've got all this excess capacity, and you've bought these planes, so what are you going to do with them."

Further, Harteveldt said companies have become more price-sensitive and are looking for cheaper options, noting ULCCs Frontier and Spirit are even getting business customers.

Over the past 12 months, shares of Spirit and Frontier have declined roughly 79% and 50%, respectively, far underperforming competitors and the market.

In an effort to boost revenue, they've changed their strategies to capitalize on the demand for more premium perks, such as dropping change and cancel fees and creating "business" class-like seats.

Boeing delivery delays have eaten into profits

Harteveldt said Boeing's ongoing delivery delays have cost airlines like American, Southwest, and United millions of dollars. This has forced them to adjust their planned flying, impacting revenue opportunities and flight availability.

He also said the lack of new planes means airlines are flying older ones for a longer time. The costs of maintenance and lesser efficiency can add up, and customers can't get access to the nicer amenities and reliability of newer jets.

Airlines need to expand with new routes and planes, he said — it's the nature of the highly competitive industry.

However, Harteveldt noted these forced network shake-ups, like Southwest's exit from four airports , could be beneficial for better leveraging airline pricing power, as capacity can be brought back in line with demand.

"The airlines should find and serve routes that are the most profitable, and that means they may need to increase capacity in some markets and completely exit others," he said.

Low-cost competitor JetBlue Airways overhauled its network to stay above water after its failed merger with Spirit.

Harteveldt noted that Airbus is also facing production setbacks that are impacting deliveries and worrying investors, though not as dire as Boeing.

Airlines are plagued by high costs in an extremely competitive industry

Nearly everything is more expensive than it was before the pandemic, and airlines are no exception.

"It's the worst possible combination of high fixed costs and inflation on the variable costs," Kraemer said, pointing to costs like planes, labor, and fuel. "There are so many permanent changes like virtual meetings that airlines will need several years to adjust for."

Fuel costs in April were 33% higher than they were during the same time in 2019, according to the most recent report from the Bureau of Labor Statistics. Meanwhile, US airline pilots have gotten huge pay raises in recent years to help fend off a labor shortage.

For low-cost carriers like Frontier and Spirit, these high costs make it challenging to make money, Kraemer said. Still, they force competitor fares down — creating another profit obstacle for mainline carriers. IATA reported in June that industry ticket prices, including ancillary, are 15% below 2019 levels despite high growth.

Harteveldt said beefing up revenue in any way possible is the best way to counteract the ever-growing costs.

"These days, it's less about having the lowest costs and more about generating the most revenue," he said, suggesting strategies such as charging for more ancillaries, reducing the number of discount tickets sold, or creating more enticing bundle packages.

Watch: Thousands of bags pile up at US airports after flight cancellations

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