‘This is a crisis’: Canadian airlines start to hike prices as jet fuel costs soar in Iran war

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The spokesperson said the situation is “still highly volatile and unpredictable,” but travel demand remains resilient.

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“Airfares reflect current operating costs and typically fluctuate based on market supply and demand,” wrote a WestJet Airlines Ltd. media spokesperson in an email. “In recent days, fuel prices have continued to rise, and fares have adjusted accordingly.”

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A media spokesperson from Flair Airlines said in an email that the company would not be speculating on future price changes, “as the situation is dynamic and it would be premature to comment.”

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Some international airlines have announced major updates as well.

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Hong Kong’s Cathay Pacific Airways Ltd. announced fuel surcharges are now included on all passenger tickets, with surcharges for Canada set to double from $101 to $202.60 starting March 18.

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Air India and Air India Express are phasing in fuel surcharges across domestic and international routes.

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And Air New Zealand said Thursday it would cut around 1,100 flights, or five per cent of capacity, through early May,

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Gradek said smaller carriers in weaker financial positions, such as Air Transat and Flair, are the ones that will be hit first.

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Pruneau said during Air Transat’s earnings call that the company was looking at other ways to save on costs, “including restricting our expenses across the company to make sure that we’re going to be able to deal with that fuel spike.”

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Gradek said airlines will start with cutting or consolidating flights as demand for travel pulls back, and then reducing services, such as drinks and meals, before beginning to park airplanes.

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“We’re not far away from that (if) you keep this going for another couple of weeks,” Gradek said. Travellers could start changing their itineraries or cancelling travel plans as well, he added.

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“The consumer has to buy the ticket — and if the price gets too crazy, demand will shut down,” he said. “It’s a double whammy for those airlines that are really in financial straits.”

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Suzanne Acton-Gervais, president of the Association of Canadian Travel Agencies and Travel Advisors (ACTA), said in an email that ACTA is monitoring the situation closely.

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“Canadians continue to show strong interest in travel, and what our members are seeing is that travellers remain attentive to value and predictability when making travel decisions,” Acton-Gervais said.

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Gradek said Canada is in the middle of a seasonal lull in domestic travel until the Victoria Day long weekend starting May 16, making the market more sensitive to price changes. If airlines raise prices too high and depress demand, they might have to launch a “price war” to bring back traffic.

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“For the next six to eight weeks, the airlines are going to have to walk that line very, very carefully,” Gradek said.

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