Brace for sticker shock this summer as high demand drives international airfares to five-year highs

Brace for sticker shock this summer as high demand drives international airfares to five-year highs

Domestic trips though are below pre-pandemic prices

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Canadians are looking to fly more often but are showing increased wariness about costs, according to a report by travel app provider Hopper Inc. that found customers are checking the price more frequently before they book than in the past.

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The company’s data shows travellers are checking the price of trips 50 per cent more often on average than in previous years, as inflation and high interest rates drive up costs, putting more pressure on travel budgets this year than ever before.

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“Even as travellers expect to travel more and spend more, flight and hotel bookers remain incredibly price-conscious,” the report said.

Fares on international air flights to all regions except the U.S. is surging dramatically compared to pre-pandemic levels as airlines have been slow to return to full capacity and higher jet fuel prices prevail, Hopper lead economist Hayley Berg said.

For example, a trip from Canada to Europe costs 36 per cent more this summer, for departures in June, July and August, compared to fares in 2022, Hopper’s data show.

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The most expensive trips cost over $2,000 for Asian destinations, 31 per cent more than last year and almost double the price from 2019.

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“International travellers are in for some sticker shock this year. High demand and lower supply on international routes is driving airfare to the highest levels in at least five years,” Berg wrote in the report.

Airfare for domestic trips within Canada this summer, on the other hand, is in line with domestic airfare at this time last year and 17 per cent below 2019 levels, she said.

So far, concerns with price don’t seem to be denting the appetite for travel. According to Hopper’s report, more than half of its app users say they plan to take more trips this year than in previous years, despite worries about the economy. The company said its users are already booking more trips and stays than pre-pandemic.

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It said demand for international flights has always been strong in Canada, with 77 per cent of all searches made for international trips, up from 65 per cent in the same time last year, demonstrating the growth in demand for international travel in the last year.

This month, Canada’s flagship carrier, Air Canada, reported being on the verge of erasing its pandemic-related losses thanks to surging demand for travel. The company had lifted its earnings outlook for the year by an additional $1 billion based on improved traffic, stronger-than-anticipated demand for travel and lower-than-expected fuel prices.

The airline this week also reported strong operational performance to begin the summer travel season. It said about 540,000 customers flew with the carrier between May 19 and 22, the May long weekend that traditionally marks the start of the summer travel season.

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Air Canada chief executive Michael Rousseau said demand is expected to persist, with strong advanced bookings for the remainder of the year.

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Those bookings may continue to roll in if another trend Hopper noticed remains in place: users are booking flights closer to the time of departure than ever before.

“After three years of travel restrictions, uncertainty, and disruption, one of the most notable shifts in consumer behaviour is how travellers are planning their trips,” it said. According to the report, travellers start planning and make their first search for a trip five weeks before departure, compared to nearly seven weeks before departure pre-pandemic.

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To keep up with robust demand, carriers have been increasing capacity as they work to reach pre-pandemic levels.

International capacity for Canadian airlines is at 94 per cent of 2019 levels, up 37 per cent compared to last year, Berg said. In April this year, three million seats departed to international destinations, up from 2.2 million last year and but still trailing the 3.2 million in 2019.

Domestic capacity within Canada is at 93 per cent of 2019 levels as of April, which is 22 per cent higher than last year.

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