IATA Warns of Rising Air Fares: Canadian Infrastructure Fees 'Unacceptable'

Silhouette of passengers standing by a plane near an airport window

Travel advisors and consumers should brace themselves for higher airfares in the coming months, IATA says.

At the organization’s annual meeting in Dubai on 03JUN, officials said worldwide inflation, stubborn jet fuel costs, and a lack of new, fuel-efficient airplanes would likely send air fares spinning upward.

Delegates at the IATA session in Dubai were also briefed on the ongoing discussion of airfares and airline competition in Canada, a subject the federal government will soon tackle in public hearings.

Peter Cerda, IATA’S Regional Vice President, The Americas, said in a presentation that Canadian airlines “face an extremely high-cost burden for air infrastructure resulting in high ticket prices, leading many Canadians to cross the U.S. border to take flights.”

He also noted that the federal government charges rent to Canada’s airports, “money which is not directly reinvested into the aviation value chain.” Passengers are charged airport improvement fees through their tickets, thus funding improvements in airport infrastructure.

“For example, passengers flying a round-trip between Calgary and Toronto paid $100 (C$140) in additional expenses on their tickets,” he said. “This is simply unacceptable.”

Cerda also tackled the issue of consumer protection in both Canada and the U.S.

“Unfortunately, we continue to see legislation being proposed in many countries for the protection of the consumer which will only drive-up costs and not necessarily help the actual traveller,” he said. “In Canada, proposed changes to the Air Passenger Protection Regulations would significantly limit the ability of carriers to avoid fines for delays and cancellations that are outside of the airlines’ control. In the U.S. airlines will be forced to provide automatic refunds for delays or cancellations, irrespective of the cause of the disruption.”

Additionally, a lack of new planes (hello, Boeing) means airlines can’t expand their routes and increase supply, which would help bring prices down.

On top of that, a global push for the aviation industry to lower its carbon footprint has more airlines scrambling over a limited supply of sustainable aviation fuel, IATA said.

“The airlines will continue to do everything they can to keep costs in control as much as possible for the benefit of consumers,” said International Air Transport Association director-general Willie Walsh. “But I think it’s unrealistic to expect that airlines can continue to absorb all of the costs. … It’s not something we like to do, but it’s something we have to do.”

IATA estimates global airline revenue will reach nearly $1 trillion (all figures USD) in 2024, a record high. This year, there will be 4.96 billion travellers on airplanes, and total expenses for carriers will reach $936 billion, another record high.

Associated Press reports industry profits also are expected to be nearly $60 billion this year.

Emirates President Tim Clark said airline profit margins are pretty much in the single-digit range.

“It is quite amazing that ticket prices are where they are today,” he said. “I think the value-for-money proposition that the consumers have had the benefit from for many decades is something that is one of those hidden bits of the narrative.”