CAPACITY GLUT

Early Holiday Gift for Canadians: Air Travel Costs Dropping Fast

Plane take off airplane

The cost of air travel continues to fall for Canadians.

In its latest consumer price index report, Statistics Canada says the price of air transportation in Canada dropped 19.4% in October. According to Canadian Press, that follows a year-over-year drop of 21% in September, and 20% in August.

A massive spike in air travel demand following the COVID-19 pandemic sparked a huge increase in air fares, so one could argue a course correction was due to happen.

While data shows that airfares in Canada overall have normalized from an exceptionally strong 2022, “pricing remains above pre-pandemic levels despite the current economic uncertainty," National Bank analyst Cameron Doerksen said in a note to investors.

It’s good news for Canadian travellers, but not so much for airlines.

“The travel sector continued to roar back this year, with seat capacity among big Canadian carriers at 92% of 2019 levels, according to figures from aviation data firm Cirium,” CP states.

“But experts say customers are now curtailing travel plans in response to strained purse strings and nearly two years of high inflation, even as airlines ramp up flight volumes and try to lure Canadians back on board with lower prices.”

TD Cowen analyst Helane Becker told Canadian Press there's "too much capacity" in some markets, including sun destinations and major routes between big cities.

CP said trans-Atlantic and trans-Pacific flight costs remain high due to strong demand.

CHART

AIR TRANSPORTATION COSTS VERSUS 2022

  • October: -19.4%
  • September: -21%
  • August: -20%
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