hkskyline
July 6th, 2005, 03:37 PM
Still flying the pricey skies
Canadians keep filling jets despite airfare hikes to offset rising fuel costs. Americans, on the other hand, are staying home
LASZLO BUHASZ
02 July 2005
The Globe and Mail
Industry insiders say Canadians are still in a travelling mood this summer despite an increase last month in domestic airfares to cover rising fuel prices.
There is no indication that fare hikes are having a significant impact on domestic air travel, says Allison Eaton, a spokeswoman for travel agency Flight Centre North America. “I think the general public is aware of the high cost of fuel since they face it as an everyday part of their life when they fill up their cars,” she said.
According to Doug Fyfe, president of on-line travel agency Vacation.com Canada, many travellers accept that airfares in Canada are traditionally high. “The low fares in the Jetsgo era expanded the demand circle for air travel outside the traditional market,” he said. “People who wouldn't ordinarily travel by air hopped on a plane to take advantage of bargain prices. Any fall off now is probably those people who would ordinarily travel by bus or train or drive a car.”
Both Air Canada and WestJet have benefited from the demise of Jetsgo in March, and see current fares as a return to what they regard as a rational marketplace.
“We have long said that upon Jetsgo's departure from the marketplace, we would see prices return to normal and more accurately reflect the cost of providing service,” said Air Canada spokeswoman Laura Cooke.
“The prices being charged now are sustainable. The bargain fares were simply not sustainable,” agreed Gillian Bentley, a spokeswoman for Calgary-based WestJet.
The latest increases by Air Canada and WestJet Airlines saw short-distance fares up to 483 kilometres rise by $8, medium-haul service between 484 kilometres and 1,609 kilometres climb by $10, and routes longer than 1,609 kilometres increase by $15.
Air Canada's May load factor — the proportion of available seats filled — increased to 79.9 per cent from 78.5 per cent in the same month last year, and the airline saw traffic on its mainline operations climb 6.7 per cent to 3.65 billion revenue passenger miles, the number of paid seats multiplied by the distance flown.
WestJet's May load factor rose to 70.6 per cent from 65.1 per cent as its traffic jumped 32.2 per cent to 597 million revenue passenger miles.
“If [the airlines] are able to pass off fuel surcharges and keep their planes full, that means there is sufficient demand there to overcome fare increases,” said David Redekop, principal research associate at the Conference Board of Canada.
It may also mean that Canadians flying domestically may simply be swallowing higher fares because they can make other trip compromises. “At the end of the day,” said Vacation.com's Fyfe, “it doesn't help to talk about the price of this component and the price of that component in the cost of a trip. What matters is the final cost.
“What people have done in the past, and will probably do in the future, is buy down a little bit. If the cost of air rises, they'll stay in a three-star hotel instead of a four-star property and only go for five days instead of six. If consumers really want to travel, they'll adjust one or two pieces of the equation to get a total price they can afford.”
Statistics Canada figures point to a record high number of trips overseas. In April, the most recent month with figures available, overnight outbound travel from Canada increased by 5.6 per cent, compared with April, 2004, reaching 1,850,000 trips, the highest number for the month in a decade. Travel to overseas destinations increased by 14.7 per cent, reaching 603,000 trips, the highest level ever recorded for Canadians travelling overseas in April.
“It's going to be a great year for airlines,” said the Conference Board's Redekop. “Travel to Asia will be up between 20 and 30 per cent this year over 2004, and Eastern Europe is a hot destination.”
There have been no dramatic increases in fares to overseas destinations, said Redekop, and while there is some price sensitivity in the outbound market, most airlines have increased capacity.
The only dark note in what is expected to be an excellent year for the Canadian tourism industry comes with a sharp drop in U.S. visitors following hikes in the cost of fuel.
Fyfe said those in the tourism industry who aren't travel agents are more concerned about the drop in the number of U.S. visitors, some 85 per cent of whom travel to Canada by car and are affected by the soaring price of fuel.
In April, the volume of overnight travel from the U.S. to Canada decreased by 10 per cent to 806,200 trips, according to Statscan. Auto travel decreased by 13.9 per cent, while non-auto decreased by 3.3 per cent.
Gasoline prices are close to $2.50 (U.S.) a gallon on average, and some think they could rise close to $3 a gallon by the end of the year, said Fyfe. “For Americans, who have been used to paying considerably less, this run-up in price has been rapid and it's obviously going to have an impact on their travel plans,” he said. “This will affect our tourism industry more than the domestic impact of higher fuel prices.”
The public will soon see other tourism-related transportation costs increase because of higher fuel prices. Crystal Cruises, for example, has just announced a $4 (U.S.) a person per day fuel surcharge on cruises as of July 15. Industry observers say other cruise lines are likely to follow suit.
Canadians keep filling jets despite airfare hikes to offset rising fuel costs. Americans, on the other hand, are staying home
LASZLO BUHASZ
02 July 2005
The Globe and Mail
Industry insiders say Canadians are still in a travelling mood this summer despite an increase last month in domestic airfares to cover rising fuel prices.
There is no indication that fare hikes are having a significant impact on domestic air travel, says Allison Eaton, a spokeswoman for travel agency Flight Centre North America. “I think the general public is aware of the high cost of fuel since they face it as an everyday part of their life when they fill up their cars,” she said.
According to Doug Fyfe, president of on-line travel agency Vacation.com Canada, many travellers accept that airfares in Canada are traditionally high. “The low fares in the Jetsgo era expanded the demand circle for air travel outside the traditional market,” he said. “People who wouldn't ordinarily travel by air hopped on a plane to take advantage of bargain prices. Any fall off now is probably those people who would ordinarily travel by bus or train or drive a car.”
Both Air Canada and WestJet have benefited from the demise of Jetsgo in March, and see current fares as a return to what they regard as a rational marketplace.
“We have long said that upon Jetsgo's departure from the marketplace, we would see prices return to normal and more accurately reflect the cost of providing service,” said Air Canada spokeswoman Laura Cooke.
“The prices being charged now are sustainable. The bargain fares were simply not sustainable,” agreed Gillian Bentley, a spokeswoman for Calgary-based WestJet.
The latest increases by Air Canada and WestJet Airlines saw short-distance fares up to 483 kilometres rise by $8, medium-haul service between 484 kilometres and 1,609 kilometres climb by $10, and routes longer than 1,609 kilometres increase by $15.
Air Canada's May load factor — the proportion of available seats filled — increased to 79.9 per cent from 78.5 per cent in the same month last year, and the airline saw traffic on its mainline operations climb 6.7 per cent to 3.65 billion revenue passenger miles, the number of paid seats multiplied by the distance flown.
WestJet's May load factor rose to 70.6 per cent from 65.1 per cent as its traffic jumped 32.2 per cent to 597 million revenue passenger miles.
“If [the airlines] are able to pass off fuel surcharges and keep their planes full, that means there is sufficient demand there to overcome fare increases,” said David Redekop, principal research associate at the Conference Board of Canada.
It may also mean that Canadians flying domestically may simply be swallowing higher fares because they can make other trip compromises. “At the end of the day,” said Vacation.com's Fyfe, “it doesn't help to talk about the price of this component and the price of that component in the cost of a trip. What matters is the final cost.
“What people have done in the past, and will probably do in the future, is buy down a little bit. If the cost of air rises, they'll stay in a three-star hotel instead of a four-star property and only go for five days instead of six. If consumers really want to travel, they'll adjust one or two pieces of the equation to get a total price they can afford.”
Statistics Canada figures point to a record high number of trips overseas. In April, the most recent month with figures available, overnight outbound travel from Canada increased by 5.6 per cent, compared with April, 2004, reaching 1,850,000 trips, the highest number for the month in a decade. Travel to overseas destinations increased by 14.7 per cent, reaching 603,000 trips, the highest level ever recorded for Canadians travelling overseas in April.
“It's going to be a great year for airlines,” said the Conference Board's Redekop. “Travel to Asia will be up between 20 and 30 per cent this year over 2004, and Eastern Europe is a hot destination.”
There have been no dramatic increases in fares to overseas destinations, said Redekop, and while there is some price sensitivity in the outbound market, most airlines have increased capacity.
The only dark note in what is expected to be an excellent year for the Canadian tourism industry comes with a sharp drop in U.S. visitors following hikes in the cost of fuel.
Fyfe said those in the tourism industry who aren't travel agents are more concerned about the drop in the number of U.S. visitors, some 85 per cent of whom travel to Canada by car and are affected by the soaring price of fuel.
In April, the volume of overnight travel from the U.S. to Canada decreased by 10 per cent to 806,200 trips, according to Statscan. Auto travel decreased by 13.9 per cent, while non-auto decreased by 3.3 per cent.
Gasoline prices are close to $2.50 (U.S.) a gallon on average, and some think they could rise close to $3 a gallon by the end of the year, said Fyfe. “For Americans, who have been used to paying considerably less, this run-up in price has been rapid and it's obviously going to have an impact on their travel plans,” he said. “This will affect our tourism industry more than the domestic impact of higher fuel prices.”
The public will soon see other tourism-related transportation costs increase because of higher fuel prices. Crystal Cruises, for example, has just announced a $4 (U.S.) a person per day fuel surcharge on cruises as of July 15. Industry observers say other cruise lines are likely to follow suit.