Could Redesigning Travel Products Be the Answer to Rising Costs?
As jet fuel prices, labor costs and exchange-rate volatility all rise, managing the cost of international travel products has become a central challenge for the travel industry. Rather than simply raising prices, travel agencies are adjusting when they issue air tickets and how they structure accommodation, itineraries and services.
According to the International Air Transport Association (IATA)’s 2026 outlook, the global airline industry’s projected net profit has been cut from $45 billion in 2025 to $23 billion in 2026 amid geopolitical shocks in the Middle East and higher jet fuel prices. Demand for air travel remains resilient, but cost pressures are affecting both package prices and travel agencies’ profitability.
Why High-Cost Travel Is Becoming the New Normal
Jet Fuel and Geopolitical Risk
Jet fuel is one of the largest cost items for airlines. IATA expects jet fuel prices in 2026 to be about 70% higher than the previous year and says rising fuel costs could influence airfares as well as airlines’ efforts to improve operating efficiency.
Conflict in the Middle East or disruptions along major air routes can affect not only oil prices but also the cost of rerouting flights, insurance, maintenance and operations management. As a result, travel agencies increasingly need to segment their products according to departure dates and when seats are secured, rather than locking in package prices for extended periods.
The Combined Burden of Inflation and Exchange Rates
Travel costs are not determined by airfares alone. Local hotel rates, transportation, meals and guide fees all fluctuate, while a weaker Korean won increases the local costs of overseas travel when converted into won.
The International Monetary Fund (IMF) has identified a resurgence in inflation and geopolitical tensions as key downside risks to the global economy in 2026. The travel industry likewise faces the challenge of managing a complex cost base in which multiple variables can move at the same time.
How Travel Agencies Are Restructuring Their Products
More Flexible Ticketing and Seat Management
As airfares become more volatile, travel agencies are focusing on separating last-minute products from early-booking offers and adjusting prices and itineraries based on the seats they have secured.
According to reports from South Korea’s travel industry, agencies have been using an early-ticketing strategy during periods of rising fuel surcharges to limit cost increases in existing packages. Rather than automatically raising prices, the approach aims to lock in product costs first and reduce the risk involved in selling the package.
Making Accommodation, Meals and Sightseeing Optional
Instead of offering a single package with the same services for every customer, travel agencies can restructure their products into standard and optional tiers. Making hotel category, number of meals, private transportation and attraction tickets selectable allows agencies to lower the initial price while giving customers more choices based on their budgets.
However, cutting key attractions too aggressively or downgrading accommodation to reduce costs can undermine customer satisfaction and brand trust. Product descriptions should clearly identify what is and is not included, along with any additional charges, to minimize the gap between the advertised price and the actual experience.
From Group Packages to Tailored Travel
In a high-cost environment, large-scale customer recruitment alone may not be enough to secure profitability. Travel agencies need to develop products for clearly defined groups—such as families, seniors, corporate training participants and sports or concert travelers—with routes and lengths of stay optimized around their specific purposes.
The Ministry of Culture, Sports and Tourism‘s decision to make integrated air-ticket distribution solutions and the use of artificial intelligence in tourism services key topics at its 2025 tourism AI forum also shows that the industry is moving toward data-driven product management.
Managing the Customer Experience Matters More Than Raising Prices
The goal of restructuring products is not simply to make them cheaper. The priority is to design a transparent structure that helps customers understand which services they are choosing and which they are giving up.
For example, a basic product could focus on transportation and accommodation, with local experiences and premium meals offered separately as add-ons. Conversely, on itineraries involving long journeys, prioritizing ease of travel and time to rest over a higher hotel category may produce greater satisfaction.
Travel agencies should explain booking, cancellation and refund policies, when fuel surcharges are applied, and the cost of optional local excursions during the sales process. Presenting the differences between products in a comparison table or itinerary can also help prevent cost-cutting measures from being misunderstood as a reduction in service.
New Revenue Models Driven by Data and Technology
Online booking data and customer behavior analysis can be important tools for responding to high-cost travel. By analyzing demand by departure period, booking rates by destination and airfare movements, agencies can fine-tune when to secure seats and launch promotions.
Introducing a dynamic pricing policy that reflects real-time inventory and exchange-rate information can also reduce the burden of applying uniform prices to every product. This approach, however, depends on clearly informing consumers about the criteria and timing used to adjust prices.
In a High-Cost Era, Competitiveness Depends on Product Design
As high oil prices, inflation and exchange-rate volatility persist, a travel agency’s competitiveness will depend less on its ability to offer the cheapest product than on its ability to design products that manage both costs and the customer experience.
Bringing forward the timing of ticket issuance, dividing services into optional components and expanding purpose-built products can ease the price burden while preserving differentiation. In the long term, technology-driven demand forecasting and transparent pricing policies are likely to determine the travel industry’s sustainability.
Frequently Asked Questions (FAQ)
What is a high-cost travel structure?
It refers to a situation in which multiple costs—including jet fuel, labor, accommodation, local prices and exchange rates—rise at the same time, driving up the cost and selling price of travel products.
How do travel agencies respond to rising airfares?
They manage the risk of cost fluctuations through early ticketing, more granular seat management, differentiated products by departure date and optional products that exclude airfare.
Can restructuring a product lead to lower travel quality?
Satisfaction can fall if key attractions or accommodation quality are unilaterally reduced. It is important to clearly explain the difference between basic and optional services.
What should I check when choosing an inexpensive travel product?
Check whether airfare and fuel surcharges are included, as well as the hotel category, number of meals, optional excursions and shopping stops, local transportation costs, and cancellation and refund conditions.
Why are tailored travel products advantageous in a high-cost era?
They allow customers to focus their spending on the schedules and services they actually want, reducing unnecessary expenses. They also enable travel agencies to build differentiated revenue models aimed at specific customer groups.
