Airfares dropped 19% in past year as consumers pull back, more flights added

globalnews.ca:

Statistics Canada says airfares have plummeted over the past year, as airlines shore up capacity even while consumers think twice about travelling in a world of higher costs.

In its consumer price index (CPI) Tuesday, the agency said the price of air transportation dropped 19.4 per cent last month compared with October 2022.

The figure follows a roughly 21 per cent year-over-year drop in September and a 20 per cent decrease in August, after rampant post-pandemic demand last year outstripped carriers’ capacity to meet it, resulting in sky-high fares.

The data also showed airfares declined four per cent on a monthly basis in October, when they typically rise ahead of the holiday season.

The travel sector continued to roar back this year, with seat capacity among big Canadian carriers at 92 per cent of 2019 levels, according to figures from aviation data firm Cirium.

But experts say customers are now curtailing travel plans in response to strained purse strings and nearly two years of high inflation, even as airlines ramp up flight volumes and try to lure Canadians back on board with lower prices.

TD Cowen analyst Helane Becker said there’s “too much capacity” in some markets, including sun destinations and major routes between big cities.

Though bookings are up for American Thanksgiving, Christmas and New Year’s, they’re worse than expected for off-peak periods as consumers scale back.

Observers have cited less disposable income amid increased costs on everything from rent and mortgages to food, gas and student loans.

“We are in a period of a general domestic slowdown. And I think I would point directly at this whole inflationary situation,” said aviation consultant Rick Erickson, even as the overall inflation rate slowed