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Air fares plummet in Canada as competition up, demand down

Ticket prices down over December, and over January, 2023, but still above 2019 levels
Statistics Canada says the price of airfare fell more than 14 per cent in January versus the same month in 2023. WestJet passengers use a self-service kiosk in the domestic check-in area at Vancouver International Airport, in Richmond, B.C., on Friday, May 19, 2023. THE CANADIAN PRESS/Darryl Dyck

The price of a plane ticket fell more than 14 per cent on average in January compared with a year earlier, according to new data from Statistics Canada.

Airfare also dropped nearly 24 per cent between December and January, the agency’s consumer price index report said, as holiday demand gave way to stay-at-home habits last month.

However, the price of a ticket remained 10 per cent above 2019 levels, reflecting aviation’s higher costs and slightly lower capacity in a post-pandemic world.

The year-over-year fare decline for January follows a trend seen since April where prices have fallen compared with the same months the year before. December registered a nearly 10 per cent year-over-year fare drop, while November saw a 17 per cent year-over-year decrease.

Duncan Dee, former chief operating officer at Air Canada, said the sagging prices reflect a levelling-off in demand due to the financial pressures that consumers continue to feel from inflation and higher interest rates.

“We saw that over the Christmas peak this year. It just was not as busy as it was in previous years,” he said, referring to pre-pandemic totals.

Air traffic in December notched 3.5 per cent below volumes from the same month in 2019, ending a five-month run in which passenger numbers had surpassed pre-COVID-19 levels, according to Statistics Canada.

Domestic passenger traffic also dipped one per cent in December compared with a year earlier, marking the first year-over-year monthly decline for that segment in 2023, agency figures show.

“Canadian consumers are probably feeling the pinch overall from the cost of living. And one of the activities that they tend to cut back on in that type of environment is air travel,” Dee said.

Competition also remains fierce between Canadian airlines, as smaller players expand and WestJet and Air Canada battle budget carriers for customers on routes to sun destinations and North American cities.

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