Inflation in Canada is down, and a sharp fall in air travel costs is partly responsible.
The latest StatsCan report states that consumers paid less for air transportation (21.1%) in September on a year-over-year basis. That coincided with a gradual increase in flights offered by airlines over the previous 12 months, the agency said.
Robert Kokonis, president and managing director at AirTrav Inc., told Open Jaw that the StatsCan figures estimate the average change of airfares within Canada and between Canadian cities and international destinations.
“I am not surprised given the growth of seat capacity recovery over the past 12 months, particularly in domestic and international markets, though less so in the Canada-US transborder market,” he said. “In the domestic arena, the growth of seat capacity by most carriers, including the discount players along with the introduction of domestic jet service across Canada by Porter Airlines, had a significant impact.
“On international routes, owing sharp passenger demand, carriers raced to build back existing routes and to add new routes. In most markets, growth in seat capacity outpaced growth in demand,” Kokonis said.
“Looking ahead, I have some concern for weakening demand in many markets in November, though I am unsure if this weakness will carry forward into the key January to March sun market period. Quite likely it will be the state of consumer wallets that will dictate fare direction.”
William G. Morrison, professor of economics at Wilfred Laurier University in Ontario, told BNN Bloomberg that the steep decline is, indeed, due to a major increase in supply, as airlines “move closer toward pre-COVID passenger levels.”
“As supply increases, market prices tend to decrease – or increase at a slower rate. All else held constant,” Morrison said. The growth of low-cost airlines such as Flair and Lynx also have helped increase competition and keep a lid on prices, he said.
StatsCan says inflation in September in Canada was at 3.8%, down from 4% in August.
Travel + Leisure recently reported that fall fares into Oslo were down 40% compared to the peak summer months, while air ticket prices to Madrid were down 30% and tickets to Dublin down 25%. Other destinations that had seen price drops of 20% of more included Ibiza, Florence, Stockholm and Edinburgh.
Open Jaw went online this morning (18OCT) and found Air Canada was selling one-way seats from YYZ to YVR for as little as $155 as part of a seat sale. WestJet was showing one-way seats between YYZ and MBJ from $243 mid-week in November.
