Looking to catch a flight this summer? Prepare to open your wallet even wider.
A new report says travellers are paying significantly more to fly within Canada during peak tourism season compared with last year, as limited capacity and competition outweigh softening demand to push up airfares.
Prices for domestic flights from July through September stand 14 per cent higher on average than they did 12 months ago, according to figures from the Flight Centre Travel Group.
"We're seeing definite increases in cost across the board," said Chris Lynes, managing director of the Australia-based travel agency's operation in Canada.
As the pent-up demand for leisure travel that followed the COVID-19 pandemic began to wane, slight price drops were anticipated, he said. But plateauing seat capacity and less competition conspired to boost fares, a trend especially noticeable on short-haul flights.
One-way flights from Calgary to Vancouver climbed 27 per cent to $580 on average, according to Flight Centre. Montreal-to-Toronto routes saw a 36-per-cent price increase to $781. Tickets for an Edmonton-to-Vancouver trip surged 82 per cent to $737.
"The seat capacity has either stayed the same or reduced. So when you have the excess (demand) and the lack of seats, you're always going to see the prices increase," Lynes said.
Several Canadian airlines have run into plane delivery delays caused by production problems at aircraft maker Boeing Co., which has constricted their ability to grow their fleets. WestJet's CEO said last month the airline is on the hunt for aircraft to offset postponed Boeing deliveries after a door plug blowout on a 737 Max jet flown by Alaska Airlines in January prompted U.S. regulators to halt a production expansion.
Transat A.T. Inc. and Air Canada are among the airlines facing knock-on effects from the recall of Pratt & Whitney turbofan jet engines for inspection and repair, with multiple planes sitting unused and in some cases requiring plane leases to compensate, further upping the overhead.
Meanwhile, the past 13 months brought more industry consolidation as discount carriers Lynx Air and Swoop disappeared from the skies and WestJet bought Sunwing Airlines — developments that helped spark a Competition Bureau study last month. WestJet and Sunwing alone made up 72 per cent of seat capacity from Western Canada last year, according to the bureau.
"There's just not as many seats available as there were a year ago, which intuitively should make sense given the fact that some airlines left the market," said Helane Becker, an airline analyst with TD Cowen.
Lynes added that "when Lynx goes out of business or you see a consolidation with WestJet and Sunwing, it's inevitable you're going to see a cost increase."
Porter Airlines is tacking on two planes per month, part of a rapid expansion plan that injects a dose of competition into the market. But despite the additional supply, the new jetliners likely did not depress fares, according to Mike Arnot, a spokesman for aviation analytics firm Cirium.
Business travel has also begun to recover after a long post-pandemic delay, though that only adds to the costlier tickets.
"If you're in business class, they are still quite pricey," Lynes said.
The overall rise in domestic prices extends an upward year-over-year climb that kicked off in October, according to data from Cirium.
Fares at major airlines already sat nearly 17 per cent higher year-over-year as of March (the last month for which Cirium figures were available). They also landed nearly one-quarter above 2019 levels.
However, passengers may find comfort in the fact that many flights to the United States and Europe are more affordable now than in recent years, as carriers at home and abroad ramp up overseas service.
"The other side of the coin is that you're seeing more international airlines adding capacity," Becker said, pointing to Lufthansa as one example.
Porter planned to add at least nine U.S. destinations to its network between last November and this October.
While Flair Airlines' fleet size remains in a holding pattern this year, Transat said earlier this month it would grow capacity by 11 per cent this year. However, the move notched under previous projections of 13 per cent, which in turn marked a cut from more ambitious expansion plans. The news came amid underwhelming ridership figures, and lukewarm demand from leisure travellers.
Air Canada plans to bolster capacity by between six and eight per cent this year. But Canada's biggest carrier still expects to remain below its soaring 2019 capacity levels until 2025, five years after COVID-19 first hammered the travel industry.
This report by The Canadian Press was first published June 17, 2024.
Companies in this story: (TSX:AC, TSX:TRZ)
Christopher Reynolds, The Canadian Press
