Want to take a flight this summer to go elsewhere in Canada? Get ready to open your wallet even further.
A new report argues that Canadians are paying significantly more to travel domestically during the peak tourist season compared to last year, as limited capacity and less competition outweigh slowing demand to drive up airfares .
Prices for domestic flights from July to September are on average 14% higher than 12 months ago, according to figures from Flight Center Travel Group.
“We’re seeing a clear increase in costs across the board,” said Chris Lynes, general manager of the Australia-based travel agency’s Canadian operations.
Since the pent-up demand for leisure travel that followed the COVID-19 pandemic began to decline, slight price reductions were expected, he noted. But capping seat capacity and less competition have helped drive up fares, a trend particularly visible on short-haul flights.
Business class fares illustrate this increase. On one-way flights from Calgary to Vancouver, they jumped 27% to $580. Montreal-Toronto routes saw a 36% price increase to $781. Tickets for a trip from Edmonton to Vancouver jumped 82% to $737.
Seating capacity has either remained the same or reduced. So when you have a surplus (demand) and a shortage of seats, you will always see prices increase.
Chris Lynes, Managing Director of Operations for Flight Center Travel Group
Several Canadian airlines have experienced aircraft delivery delays caused by production problems at aircraft manufacturer Boeing, which has limited their ability to expand their fleets. WestJet President and CEO Alexis von Hoensbroech said last month the airline was looking for planes to make up for delayed Boeing deliveries after a flight incident prompted U.S. regulators to suspend an expansion of production.
Transat and Air Canada are among airlines facing repercussions from the recall of some Pratt & Whitney engines for inspection and repair, with several planes remaining idle and in some cases requiring plane rentals to compensate, further increasing overhead costs.
Meanwhile, the past 13 months have seen greater industry consolidation, as low-cost carriers Lynx Air and Swoop disappeared from the skies and WestJet purchased Sunwing Airlines – developments that helped prompt a study by the Competition Bureau last month. WestJet and Sunwing alone accounted for 72 per cent of Western Canada’s seat capacity last year, according to the bureau.
“There simply aren’t as many seats available as there were a year ago, which intuitively should make sense given the fact that some airlines have left the market,” said Helane Becker, an airline analyst. airlines at TD Cowen.
Mr. Lynes added that “when Lynx goes bankrupt or you see consolidation with WestJet and Sunwing, it’s inevitable that you’ll see an increase in costs.”
Porter Airlines is adding two planes a month, part of a rapid expansion plan that injects a dose of competition into the market. But despite the additional supply, the new jetliners probably haven’t lowered fares, according to Mike Arnot, a spokesman for aviation analytics firm Cirium.
Business travel has also started to recover after a long post-pandemic lag, although that only adds to more expensive tickets.
“If you’re in business class, they’re still quite expensive,” Mr. Lynes said.
The overall increase in domestic flight prices continues the year-over-year upward trend that began in October, according to Cirium data.
Major airline fares were already almost 17% higher year-on-year in March (the last month for which Cirium figures were available). They also landed nearly a quarter above 2019 levels.
However, passengers can find comfort in the fact that many flights to the United States and Europe are more affordable today than in recent years as domestic and foreign carriers ramp up their overseas services.
“The other side of the coin is that more and more international airlines are increasing their capacity,” Mr.me Becker, citing Lufthansa as an example.
Porter planned to add at least nine U.S. destinations to its network between last November and next October.