U.S. airfares are lower than before the pandemic. Why Canadians won’t be so lucky
By Megan DeLaire
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TORONTO (CTV Network) — U.S. airfares in January reached a 15-year low — excluding peak pandemic fares — but while our two countries have a lot in common, experts say Canadian travellers shouldn’t expect the same deep discounts here.
Despite the cost of living in North America creeping upward in most other respects, airfares in the United States were down 6.4 per cent in January compared to the same month in 2023.
Not only were ticket prices down year-over-year, they were actually three per cent lower than pre-pandemic airfares in January 2020, and down 15 per cent compared to a decade ago, according to consumer price index data from the U.S. Bureau of Labor Statistics published in February. In fact, prices in January were the lowest they’ve been in the U.S. in 15 years, excluding during the peak pandemic years, when air travel slowed to a trickle.
In Canada, airfares fell 14 per cent in January compared to the same month in 2023, and 23.7 per cent compared to December 2023, but still sat at 10 per cent above pre-pandemic levels in 2019, according to Statistics Canada.
John Gradek, head of the aviation management program at McGill University, said January’s drop coincides with seasonal travel patterns – January typically represents a slump for the industry as holiday travel demand gives way to post-holiday homebody habits. Not only is it likely to be temporary, but he said it caps off a year of low airfares and is probably the last time we’ll see prices drop in Canada for awhile.
“Going forward, when we look at the consumer price index for March, April and May, the air transportation component of the index, will show a reversing trend and we’ll see fares go back up again,” Gradek told CTVNews.ca in a telephone interview on Friday.
“You’re seeing, even today, significant increase in the price levels across Canada.”
Competition is key Competition between airlines has been a major factor driving down airfares throughout 2023 and early 2024, Gradek said.
Last year was a boon for commercial flight in both countries as travellers made up for time lost during the pandemic. According to the American Express Global Business Travel Air Monitor 2024 report, Canadians took more than 10 million trips abroad between January and April 2023 – a seven per cent increase compared to the same period in 2019. At the same time, inflation and rising costs of living threatened to put an end to the honeymoon as would-be travellers tightened their belts.
In both countries, low-cost carriers competed against one another and the larger, more established airlines for a share of the market, offering attractive fares and forcing their competitors to do the same. In the U.S., those airlines include budget carriers like Frontier, Spirit and Allegiant.
“The U.S. is seeing very aggressive competitive posturing by guys like Frontier, Spirit, Allegiant,” Gradek said. “They are aware that the economy has slowed down and that there’s less disposable income…so they’re being very aggressive in the marketplace by pricing products that would attract people who have a lesser availability of discretionary income.”
Similarly, budget airlines Flair and Lynx each vied in 2023 to become Canada’s lowest-cost carriers, Gradek said, and airfares dropped significantly as Air Canada and WestJet tried to match them.
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