Airfare Prices in Canada Are Rising and Likely to Surge Again in Summer: Aviation Expert

A plane arrives at Vancouver International Airport in Richmond, B.C. on March 18, 2020. The Canadian Press/Jonathan Hayward

Airfare in Canada may have dropped at the beginning of the year, but travellers shouldn’t expect prices to stay low.

An aviation expert is predicting a rise in ticket prices this spring after more than a year of lower prices while airlines were competing for passengers to make up for lost profits during the pandemic.

John Gradek, head of McGill University’s aviation management program, said ticket costs are once again on the rise.

Mr. Gradek said while prices are beginning to rise this month and will continue to do so in April and May, he expects domestic fares to be much higher come summer.

“It’s going to be busy,” Mr. Gradek told the Financial Post, saying prices will jump in July and August. “Fares will definitely be up there.”

He attributes Canadian airlines’ rising ticket costs to inflation, fuel expenses, and a competitive market.

The rising price of airfare in Canada is not being mimicked south of the border, however. U.S. airfares reached a 15-year low in January, with the exception of peak pandemic fares.

Consumers Council of Canada executive director Ken Whitehurst told CTV that Canadian airfares will always be higher than those in the U.S.

“The Canadian and U.S. airline markets are totally different,” Mr. Whitehurst said. “The U.S. has simply more carriers and Canada has a lot fewer carriers, and even fewer that actually want to fly everywhere in Canada. So that’s been a historic challenge, particularly if the country wants to have an airline industry of its own.”

Different markets mean different cost realities for a variety of reasons, he said. Not only is the Canadian market smaller, the larger physical size of the country makes air travel more expensive, simply because of the distance between major Canadian cities.

Canada also doesn’t have as much air-travel infrastructure as the U.S. and has different airport fee and tax structures.

“It’s expensive to fly in Canada. There’s no doubt about it,” he said. “I would recommend Canadians kind of shy away from doing a direct comparison between Canada and the U.S. Do your shopping in Canada, compare the different fares, beware of hidden charges for baggage and fees, but really, enjoy travelling in Canada. We still have a pretty good system that’s in place and fares are still reasonable.”

Federal Taxes Impact Ticket Prices

A recent report claims Canada’s federal regulations are contributing to the high cost of domestic airfare.

Federal fees and taxes on airlines and airports are reflected in ticket prices, making Canada less competitive, according to a Montreal Economic Institute study.

“Ottawa prefers to treat our airports as cash cows, rather than the essential transportation infrastructure that they are,” said study author Gabriel Giguère. “These taxes have a direct effect on the high cost of domestic travel in this country.”

The rental fees airports must pay are a chief reason for higher ticket prices.

“For the 2022-2023 fiscal year, the rents paid to the federal government amounted to $419 million, an increase of 42.5 per cent in just 10 years,” the report said.

Another contributor is fuel, which is 158 percent higher in Canada than in the U.S., the report said, noting that post 9/11 security fees are also more expensive in Canada.

As of May 1, Canadian travellers will pay a $9.94 security fee for a domestic flight and $34.42 for an international flight compared to less than $15.30 in the U.S., the report says.

“When you add up all of these fees charged by the federal government, you quickly realize that a substantial portion of the price of a plane ticket is taxes,” Mr. Giguère said. “Whether a ticket is bought for a vacation or to reach our remote regions, these taxes have a negative effect on families’ budgets.”