Canadian airline fares have dropped significantly over the past year, according to new data released by Statistics Canada.
Prices were 19.4% lower in October 2023 compared to the same month in 2022. This follows a trend, with September experiencing a 21% year-over-year decrease and August seeing a 20% drop.
The decline is attributed to increased airline capacity, reaching 92% of 2019 levels, as the travel sector rebounds post-pandemic.
Despite the overall industry recovery, consumers are showing restraint due to economic uncertainties and too much capacity in certain markets, leading to decreased travel plans.
Consumers are cutting back on discretionary spending amid rising inflation and increased costs across various essentials.
Although ticket prices last month were 4.6% higher than pre-COVID-19 levels, there is increased competition domestically, exerting downward pressure on fares. However, the competition is uneven, with major routes experiencing more significant drops compared to regional flights.
The challenges persist for transoceanic flights as demand catches up with increased flight volumes, maintaining premium prices.
Shares of Canada’s main airline Air Canada (TSX:AC.B) were down 1.1% on Tuesday afternoon in Toronto.