Canadian airline ticket prices are bouncing back from their deep pandemic lows — and with Christmas around the corner consumers can expect sky high prices for the holidays.
Experts say a perfect storm of pent-up demand, higher costs and rising fuel prices mean round-trip tickets this holiday season may be higher than ever.
As recently as June, one-way flights between Toronto and Vancouver were as low as $114. While there are still low-cost tickets available from now until mid-December, tickets closer to Christmas are back up to seasonal highs, currently going for between $450 and $1,200 each way for economy flights from Toronto to Vancouver on Air Canada and WestJet.
Ambarish Chandra, an associate professor of economics at the University of Toronto, said it’s clear that airlines will benefit from pent-up demand as people plan Christmas stays and trips to warmer destinations.
However, he thinks domestic prices are currently more expensive, proportionally, than international flights, because there’s more uncertainty on international travel than domestic.
As for the elevated tickets at Christmas time? That’s a trend we see every year.
“It’s just being magnified,” said Chandra.
But the airlines have been in “suspended animation” for months, said Chandra, and can’t return to something resembling normal right away. They’re also facing higher costs compared to pre-pandemic, including rising fuel prices and a decline in the business travel that used to subsidize cheaper seats, he said.
Air Canada spokesperson Peter Fitzpatrick said airfares fluctuate due to competition, market conditions, seasonality, demand and costs.
It’s difficult to properly compare prices to 2019 tickets because things have changed a great deal since then, Fitzpatrick said in an email.
WestJet spokesperson Madison Kruger said that average fares right now are actually lower than October 2019, and added that WestJet has more than a million seats available for sale that are less than $100.
But base-fare pricing doesn’t tell the whole story, she said. WestJet is concerned about rising Airport Improvement Fees and NAV Canada charges.
“Unfortunately, while air fares fluctuate to accommodate supply and demand, third party fees are structured as fixed charges and applied to all tickets despite weak or strong demand, dramatically impacting the affordability of air travel in Canada and suppressing Canada’s economic recovery,” Kruger said in an email.
Last month, WestJet flew just over half the flights it did in September 2019, she said.
Frederic Dimanche, director of the Ted Rogers School of Hospitality and Tourism at Ryerson University, said while earlier in 2021 airlines were trying to drum up demand with low prices, now demand is rising in conjunction with vaccination rates and consumer confidence.
He predicts people will be itching to get home for Christmas, or to fly south, since neither were possible for so many a year ago.
Even in a pandemic, “what goes down must come up,” said John Gradek, a former Air Canada executive and head of McGill University’s Global Aviation Leadership Program.
People are booking what Gradek calls “revenge travel,” or the pent-up demand after months and months of cancelled trips and time away from loved ones.
Gradek said airlines are trying to be more cost-efficient than usual to try and recuperate lost revenue. One way of doing this is through flight consolidation — cancelling a flight with a lot of empty seats and moving the passengers onto another flight.
While this was a practice before the pandemic, Gradek said it’s happening more often now.
“It’s a mathematical game that they’re playing,” he said, noting that it can be very disruptive to passengers, and may result in more complaints to the transportation authority.
Fitzpatrick said airline schedules change for a variety of reasons, including commercial ones. He added that cancelling flights is not a preferred option for airlines because it causes inconvenience for staff and customers, and incurs costs for the airline.
Kruger said schedule changes are a normal part of airline operations; flight schedules are built in advance, and the pandemic has made it harder to predict things such as demand and travel restrictions.
“We are optimistic that fewer schedule revisions will be required and we will see an easement of onerous travel restrictions and federal support for travel as we come out of the pandemic and become a fully vaccinated industry as of Nov. 1, 2021,” she said.
Adding to the mix, Canadians are seeing an increase in cheaper airline ticket options thanks to low-cost carriers including Swoop and Flair. Right now, a domestic round trip at Christmas with Swoop (owned by WestJet) or Flair can be found for a similar price to some one-way tickets on WestJet and Air Canada.
This week, Flair Airlines announced it will add four new Boeing 737 MAX aircraft to its fleet in the spring of 2022, making its total 16, and allowing it to expand its number of routes by 33 per cent.
While competition from lower-cost carriers is likely to drive prices down in the mid- to long-term, we likely won’t see that effect until after Christmas, said Dimanche.
But Chandra isn’t optimistic about the future of competition in Canadian airspace.
“The market just isn’t large enough to support many more carriers,” he said.
Right now the low-cost airlines are benefiting from the pent-up demand, but Gradek doesn’t think that will last into the new year.
The Canadian market “has not been very kind” to low-cost carriers in the past, said Gradek. “They typically fail.”
But while the holiday forecast shows ticket prices climbing, plane tickets in October are slightly cheaper than they were pre-pandemic.
The average cost of a domestic round trip right now is $435, down nine per cent from October 2019, according to Adit Damodaran, economist at the travel booking app Hopper. Some flights are notably down. For example, a round-trip ticket from Toronto to Vancouver was on average $570 in October 2019, but now that trip can be found for 42 per cent less at $330, said Damodaran.
Even though the pandemic uncertainty is still in the air, experts say the usual wisdom still holds true: the earlier you buy your holiday tickets, the better the price is likely to be.
It has never made sense in previous years to wait to buy holiday plane tickets, said Chandra, and it doesn’t make sense this year.
It’s better to buy your flight now, and then cancel in the event you happen to find a cheaper one in the future.
“You never know,” he said.
With files from The Canadian Press