Cost of airfare, travel down for the 14th consecutive month

This is the 14th straight month that air transportation prices decreased year-over-year, although they dropped to a lesser extent than in the three months prior, including a 10.6 per cent decrease in July. Photo by Ashley Fraser/Postmedia

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The cost of travel dropped again last month, according to Statistics Canada consumer price index (CPI) data for August.

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Air fares were down by 7.6 per cent compared to August last year. This is the 14th straight month that air transportation prices decreased year-over-year, although they dropped to a lesser extent than in the three months prior, including a 10.6 per cent decrease in July.

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The last time air fares in Canada had a year-over-year increase was in June 2024, according to CPI historical data.

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On a month-over-month basis, fares were down 5.9 per cent in August compared to July, while last year’s sequential decline for the same time period was 8.9 per cent.

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Travel tours pushed down the cost of travel services for August, said StatCan. Prices for travel services decreased by 3.8 per cent year-over-year, after falling 1.2 per cent in July, while the cost of travel tours dropped 9.3 per cent annually, following a 1.7 per cent decrease in July, it said.

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Statistics Canada said lower demand for destinations in the United States contributed to the lower prices.

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Meanwhile, prices for traveller accommodation were higher in August, moderating the downward pressure for the travel category, it said.

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StatCan said travel accommodation prices rose nationally by 2.9 per cent in August, following a 2.7 per cent decline in July.

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It said prices for hotels increased the most, by 30.9 per cent, in Newfoundland and Labrador, where the Canada Summer Games were hosted in August. Nova Scotia also had the highest surge in hotel prices in August with a 16.1 per cent increase.

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In a note to clients, National Bank airline stock analyst Cameron Doerksen said airfares in Canada continue to be relatively weak, declining for 14 months straight.

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He noted that Air Transat, which reported its fiscal third-quarter results on Thursday, indicated that, so far, yields were 3.1 per cent higher year over year in fiscal Q4, although trending downward.

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Doerksen said the downward trend can be partly attributed to a moderation in yields following the Air Canada strike in August, from which Transat and other Canadian carriers benefited significantly.

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Doerksen said he suspects that Air Canada is being aggressive with pricing as it seeks to win back customers following the flight cancellations.

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“While this will likely pressure overall industry yields in the short term, we consider this to be temporary and would expect a normalization in yields later in calendar Q4,” he wrote.

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He also noted that Air Transat’s management said demand trends looking out to the winter are encouraging. Despite total industry capacity to sun destinations expected to be up around 10 per cent year-over-year this winter, the company remains confident the market will be able to absorb the rise in capacity, he said.

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