Printer Friendly

International travel and passenger fares, 1981-85.

International Travel and Passenger Fares, 1981-85

THE U.S. travel and passenger fare deficit increased for the fourth consecutive year in 1985--to $9.7 billion from $0.5 billion in 1981 (table 1, chart 1). Since 1981, travel an passenger fare payments have increased 49 percent to $23.8 billion and receipts have fallen 9 percent to $14.1 billion, mostly as a result of increases in the number of U.S. residents traveling abroad and decreases in the number of foreign visitors to the United States. This article reviews the trends and fluctuations in these payments and receipts over the 1981-85 period.

Travel payments.--U.S. travelers' expenditures for travel abroad increased 44 percent from 1981 to $16.5 billion in 1985. The rate of increase rose each year from 1681 to 1984 as the dollar appreciated, then dropped in 1985 as the dollar reversed its 5-year uptrend. From 1981 through early March 1985, total dollar appreciation against the currencies of key country destinations abroad ranged from 118 percent against the French franc and 115 percent against the British pound, to 65 percent against the German mark, and to 28 percent against the Japanese yen. This appreciation, combined with rapid economic growth in the United States from late 1982 through early 1985, encouraged U.S. residents to travel abroad in record numbers. Terrorist acts in 1985, which included several hijackings and airport bombings, may have at least temporarily dissuaded U.S. residents from foreign travel, particularly to Italy and Greece.

Travel receipts.--Receipts from foreign visitors for travel in the United States to fell 10 percent from 1981 to $11.7 billion in 1985. Receipts fell from 1981 to 1983, were unchanged in 1984, and increased 3 percent in 1985. Dollar appreciation was a key factor leading to a 17-percent decline in the number of overseas visitors to the United States: Most of that decline was in visitors from Europe and South America, where the dollar's rise was largest. Receipts and the number of visitors from Japan both increased steadily throughout the period.

Passenger fares.--U.S. travelers paid $7.0 billion to foreign carriers for transportation to and from the United States in 1985, a 63-percent increase from 1981. The 55-percent growth in the number of U.S. travelers on foreign carriers was the major reason for the increase. The share of U.S. travelers on foreign carriers was 45 percent in 1981, fell to a low of 42 percen in 1983, and rose to 44 percent by 1985. U.S. carriers received $2.5 billion from foreign visitors for transportation to and from the United States in 1985, a 3-percent decline from 1981. The 25-percent drop in the number of foreign visitors on U.S. carriers was the major reason for the decline. In addition, by 1985, only 37 percent of foreign visitors to the United States traveled on U.S. carriers, compared with 41 percent in 1981. The years 1981-85 were marked by only moderate increases in air fares; major increases in jet fuel prices had pushed up air fares in earlier years. Carriers responded to the increase in the number of U.S. travelers by increasing capacity, sometimes even faster than the growth of traffic. New, low-fare carriers entered the market, as did many charter carriers to Europe. Charters carried 4 percent of U.S. travelers to Europe in 1981 and 8-9 percent during 1982-85.

U.S. travel abroad

The growth in U.S. travel expenditures overseas far exceeded the growth of expenditures in Canada and Mexico. Consequently, overseas expenditures rose to 62 percent of total travel expenditures in 1985 from 57 percent in 1981. In contrast, the Canadian share of total expenditures fell to 16 percent from 18 percent, and Mexico's share fell to 22 percent from 25 percent (table 2, chart 2).

Overseas.--U.S. travel expenditures overseas were $10.3 billion in 1985, up 57 percent from 1981. Expenditures increased about 9 percent each year, except in 1984, when they were up 21 percent. The increases were almost entirely due to increases in the number of travelers overseas, in turn traceable to the previously mentioned cumulative appreciation of the dollar and rapid U.S. economic growth. The annual percentage increase in travelers rose steadily through 1984, slowing only in 1985 after the dollar had reached its peak. For 1981-85, travelers increased 53 percent (table 3, chart 3). Average expenditures of U.S. travelers overseas fluctuated slightly from year to year, increasing only 3 percent over 1981-85 (table 4). Changes in shares of total expenditures and travelers were moderate. Europe and the Mediterranean received 57 percent of all U.S. travel expenditures overseas in 1985 and was the destination for 53 percent of U.S. travelers. In 1981, the area received 55 percent of expenditures and 49 percent of U.S. travel expenditures overseas and 28 percent of U.S. travelers in 1985, down from 19 percent ot expenditures and 30 percent of U.S. travelers in 1981. South America's share of travel expenditures fell to 4 percent in 1985 from 6 percent in 1981 as its share of U.S. travelers fell to 5 percent from 7 percent. Travel expenditures in "Other areas" were 21 percent of overseas travel, up from 20 percent in 1981, while the percentage of U.S. travelers was 14 percent in both years.

Travel expenditures in Europe and the Mediterranean were $5.9 billion in 1985, up 64 percent from 1981. Because the dollar rose most sharply against the currencies of key countries in this area, annual increase in expenditures rose from 6 percent in 1982 to 23 percent in 1984, then fell to 14 percent in 1985. The average length of stay fell to 18 days in 1985 from 19 days in 1983 (table 5). (Data are not available for earlier years).

The United Kingdom was the major destination for U.S. travelers to Europe, receiving 28 percent of travel expenditures and 39 percent of U.S. travelers in 1985, compared with 27 percent of expenditures and 33 percent of travelers in 1981. France received 13 percent of expenditures and 24 percent of U.S. travelers, compared with 10 percent and 22 percent, respectively, in 1981. West Germany received 11 percent of travel expenditures and 26 percent of U.S. travelers, up from 10 percent and 21 percent in 1981. Eleven percent of travel expenditures went to Italy, as did 16 percent of U.S. travelers, compared with 8 percent and 18 percent in 1981. Switzerland received 6 percent of travel expenditures and 17 percent of U.S. travelers, an increase from 4 percent and 13 percent in 1981.

Expenditures in the Caribbean and Central America were $1.8 billion in 1985, 43 percent higher than in 1981. Growth was steady at 6 percent through 1983, surged to 25 percent in 1984, and fell to 3 percent in 1985. The number of U.S. travelers increased 43 percent from 1981. Travel to this area grew at a slower rate than some others, probably because the currencies of many Caribbean countries are pegged to the U.S. dollar.

Travel expenditures in South America were $0.4 billion in 1985, a 4-percent decrease since 1981. The number of U.S. travelers was 2 percent lower than in 1981. In spite of substantial dollar appreciation, high inflation rates and economic and political uncertainties in key countries sharply restrained travel.

Travel to "Other areas," primarily the Far East, grew as rapidly as travel to Europe. Travel expenditures were $2.2 billion in 1985, up 68 percent from 1981. The number of U.S. travelers increased 64 percent. Travel expenditures in Australia and New Zealand were up 77 percent.

Canada.--U.S. travel expenditures in Canada were $2.7 billion in 1985, up 30 percent from 1981. In 1981, when cheaper gasoline prices were prevalent in Canada, the number of travelers to Canada was strong and payments high at $2.1 billion. After the price differential for gasoline was eliminated late in the year, payments fell 6 percent to $1.9 billion in 1982 as the number of travelers decreased 19 percent; short-term travelers (travelers who returned from Canada the same day they entered) were off 25 percent, and long-term travelers (overnight or longer) were off 4 percent.

From 1983 to 1985, travel expenditures rose 25 percent. An 11-percent increase in the value of the U.S. dollar relative to the Canadian dollar was an important factor increasing the number of travelers to Canada by 5 percent. The number of long-term travelers increased 8 percent (mainly air and bus travel), and the number of short-term travelers increased 4 percent. This shift from short- to long-term travel, coupled with the associated rise in total fare payments, led a 16-percent rise in average expenditures.

Mexico.--U.S. travel expenditures in Mexico were $3.6 billion in 1985, up 24 percent from 1981. U.S. travel expenditures increased rapidly in 1981-83, then decreased slightly through 1985, restrained mostly by continuing Mexican inflation. A major devaluation in 1982 increased the number pesos a dollar could buy by 130 percent, while Mexican prices increased 59 percent that year. Further devaluation in 1983 increased the number of pesos a dollar could buy by 113 percent, while Mexican prices increased 101 percent. In 1984, the dollar increased 40 percent against the peso, but did not keep pace with Mexican price increases of 66 percent. In 1985, the dollar increased 53 percent, while prices were up 58 percent.

Over one-half of all the U.S. travel expenditures in Mexico is spent in the Mexican border area, mostly by U.S. residents living near the border. Their expenditures for shopping or other services are very sensitive to exchange rate and price changes. Most of the increase in Mexican border area expenditures occurred in 1982, when the increased buying power of the dollar far exceeded the Mexican inflation rate. At that time, the Mexican Government subsidized many staples, including gasoline, so that goods sold on the Mexican side of the border for much less than in the United States. Since 1982, expenditures in the Mexican border area have been relatively steady. Travel expenditures in Mexico's interior were unchanged in 1981-82, increased 31 percent in 1983, and fell 10 percent in 1984-85. The major earthquake in September 1985 near Mexico City may have had an impct on travel to Mexico, and the effects may be felt into 1986.

Foreign travel in the United States

the composition of U.S. travel receipts has changed considerably since 1981. Expenditures of overseas visitors in 1985 accounted for 57 percent of total travel receipts, up from 50 percent in 1981: Increases in receipts from Japan more than offset decreases from Europe (table 6). Canada accounted for 26 percent of the total travel receipts, up from 21 percent in 1981. In contrast, Mexico accounted for only 17 percent in 1985, compared with 29 percent in 1981.

Overseas.--Receipts from overseas visitors were $6.6 billion in 1985, up only 2 percent from 1981. Except for a 6-percent drop in 1983, increases in overseas travel receipts in most years were small. The number of visitors from overseas fell 17 percent from 1981, falling each year until 1984, with no change in 1985 (table 7). Average expenditures of foreign visitors in the United States increased moderately--23 percent--since 1981, more than compensating for the decrease in the number of visitors each year except 1983 (table 8).

The relative strength of the Japanese yen and weakness of European and South American currencies contributed to a shift in travel patterns. "Other areas," primarily the Far East, accounted for 42 percent of overseas receipts and 38 percent of overseas visitors in 1985, up from 34 percent of receipts and 29 percent of visitors in 1981. The Caribbean and Central America also increased their share--to 10 percent of 1985 travel receipts and 13 percent of visitors from 7 percent of receipts and 10 percent of visitors in 1981. Europe accounted for 34 percent of receipts and 39 percent of visitors in 1985, down from 39 percent of receipts and 46 percent of visitors in 1981. The share from South America also fell, to 14 percent of receipts and 10 percent of visitors, down from 20 percent of receipts and 15 percent of visitors in 1981.

Travel receipts from Europe were $2.3 billion in 1985, down 11 percent from 1981. The numebr of visitors fell 30 percent. Receipts from the United Kingdom, reflecting the large drop in the value of the pound relative to the dollar, fell 31 percent. Receipts from Germany fell 18 percent, and receipts from the Netherlands fell 5 percent.

Travel receipts from the Caribbean and Central America increased 35 percent, and the number of visitors increased 19 percent.

South American travel receipts fell 28 percent, and the number of visitors 43 percent, reflecting severe economic problems in that area.

Receipts from "Other areas," primarily the Far East, increased 29 percent, and the number of visitors 6 percent. Travel receipts from Japan, the largest source of visitors to the United States from overseas, increased 49 percent.

Canada.--U.S. travel receipts from Canada were $3.0 billion in 1985, up 14 percent from 1981. The increase occurred in 1983; receipts declined slightly in other years.

In 1982, U.S. travel receipts from Canada decreased by 2 percent. Although the total number of travelers declined only slightly, rising gasoline prices and a declining Canadian dollar contributed to a 19-percent decrease in long-term travel. Because long-term visitors spend mqre on average than short-term visitors, the decline in long-term travel was a major factor in the drop in receipts.

In 1983, a sharp increase in the number of visitors and average expenditures led to a 21-percent rise in travel receipts. Lower U.S. prices, including gasoline prices, coupled with improvements in the Canadian economy, contributed to the sharp increase in both short- and long-term travel.

From 1983 to 1985, travel receipts fell 4 percent. A 10-percent depreciation of the Canadian dollar relative to the U.S. dollar, coupled with the appreciation of the Canadian dollar against most other major currencies, discouraged Canadian travel to the United States. The total number of visitors declined by 4 percent. Auto traffic fell 5 percent, with auto travelers staying two or more nights declining 17 percent. Air traffic increased 6 percent.

Mexico.--Travel receipts from Mexico were $2.0 billion in 1985, 47 percent below 1981 receipts. Most of the decline took place in 1982-83, when the Mexican government took several actions to devalue the peso and prevent an outflow of capital from Mexico. In January 1982, 26 pesos could purchase a U.S. dollar. By the end of 1983, 142 pesos were needed to purchase a U.S. dollar. In addition, the Mexican Government established exchange controls limiting the availability of dollars, nationalized the Mexican banking system, and converted U.S. dollar-denominated bank accounts into pesos at rates well below the "market rate." These actions significantly reduced the availability of dollars to spend in the United States, which contributed to decreases in Mexican travel expenditures of 18 percent in 1982 and 37 percent in 1983. Receipts fell only 2 percent in 1984; expenditures in the U.S. border area increased 4 percent, partly offsetting a 22-percent drop in travel in the U.S. interior. Receipts in 1985 were up 6 percent, due to increases in both interior and border travel. The peso continued to decline over the year, but lower inflation in the United States--under 4 percent compared with 58 percent for Mexico--still made U.S. travel attractive.
COPYRIGHT 1986 U.S. Government Printing Office
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1986 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Bolyard, Joan E.
Publication:Survey of Current Business
Date:May 1, 1986
Previous Article:Federal personal income taxes: revised and updated estimates of liabilities and payments, 1949-84.
Next Article:U.S. business enterprises acquired or established by foreign direct investors in 1985.

Related Articles
US Airways Adds MetroJet Service Between Miami and Dulles.
United Welcomes Summer With Even Lower Fares.
Northwest Launches International Family Fares; Roundtrip Fares Start at $370 For Adults and $70 for Accompanying Children.
West Meets East for Less: Delta Offers Low Fares to Celebrate New Moscow Service.
Euro rail fares are announced.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters