We’ve all said it. With fuel prices so low when will airfare prices go down.
I guess we weren’t watching, because it appears it has according to a recent report by StatsCan. According to their data, average prices in 2014 went down to levels not seen for many years, going all the way back to 2009.
There are some caveats to this information based on where you live, and the amount of taxes and service charges that are mandated by government or snuck in by airlines in terms of the extra add-on charges.
Nevertheless, the average domestic and international air fare as of the end of 2014, from the most current statistics analyzed, was approximately the same as it was back in 2010. It was $243.50 in 2010 and 243.70 last year.
Highlighting domestic airfares only, StatsCan reported an average fare of $184.90 in 2014 down over 3% from the previous year. Similarly international fares were down 2.2% from 2013 prices last year as well.
Notwithstanding Canadian airline complaints that they must buy fuel in US dollars, thereby severely impacting their profit potential according to their media releases, airlines have been doing just fine.
Last year continued demand bulged their bottom line profits, while new ancillary sources of revenue masked some of the real costs of travel for most of us who check luggage, want to sit in an exit row, or desire something more than a small bag of pretzels in flight.
Notwithstanding the above, why are prices, generally speaking, the same or lower than in the past? According to StatsCan it is because of aggressive competition both inside and outside of Canada.
Canadians want the best travel deals they can find, and apparently will keep looking until they find them.
In 2014, and there is no reason to believe things have changed today, 96.2 % of Canadian passengers flew on discounted fares in each and every quarter of that year. For those looking for the best deals on the domestic and international averages, the third quarter was the best time to fly, since over 98 % of us were able to find discounted options last year. Domestically, the biggest drop in prices was in our winter months, during the first quarter of the year.
As always, there are the proverbial flies in the ointment, and Winnipeg was one of them.
While domestic fares were down in all 10 of the major Canadian cities measured, we were not one of those with the largest drop in fares.
If you lived in Saskatoon Saskatchewan you would be the happiest traveller with the lowest average fare of $167.10 followed by its capital city Regina at $170.30.
Toronto and Vancouver had the highest fares. Toronto, the perennial highest, was at $208.80 for its average fare prices, followed by Vancouver at $201.20.
Surprisingly Winnipeg’s average fares at $190.70 were the third highest, a full $10 higher than Edmonton, which was fourth on the list.
We may perceive it to be quite costly to fly overseas, but international fares have also dropped significantly from previous years, by much the same percentages.
It is important to underscore again, that these measurements are all made using base fare prices.
They do not include the above mentioned ancillary revenue sources, or taxes, fees, and fuel surcharges, especially high on sunspot packages and charter fares.
A second report issued by the industry giant American Express Global Business Travel in its 2016 forecast suggests that the coming year will see only modest gains in air prices.
They project similar small increases in hotel and ground transportation options as well.
It is unknown how recent events in Europe may impact these projections, but the forecast predicted at the time of the study, was that stronger demand would outpace increases in supply.
While this would normally lead to higher prices the “American Express Global Business Travel”, forecast does not anticipate that.
Even in the business travel sector, low cost carriers have had a significant impact in holding air fares down. Other studies point out that corporations are no longer allowing lower level executives the privilege of flying business class, and many companies insist their corporate travellers use using low cost carriers, particularly for short haul flights
Business travellers, like the rest of us, like their perks. And now that Westjet has introduced a reward program of its own, we may see a more pronounced movement to Canada’s second carrier, without the protests that may have been there before the program was launched.
While I don’t have specific statistics for the Canadian business market, I do know of a number of regular business travellers who now use Westjet over Air Canada. The points cannot yet be used on flights with international partners as the Aeroplan program can, but for those who travel to Canadian destinations the program is much appreciated.
Normally we could expect strong increases in travel to counties and areas where the local currencies have dropped significantly against the value of the American dollar.
Like the Canadian dollar, the Euro was one of those currencies. But so too were others, like the Brazilian Real and more recently the Argentinian Peso.
World events can change the dynamics completely and given that travel fears may adversely affect bookings, it is more likely that prices will go down, rather than up.
For those willing to grab the opportunity to travel, putting fears in their proper perspective, as suggested in a previous column, there could be an abundance of accommodation and transportation bargains.