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Domestic airfares on upward path
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| dEsidEL |
this article actually came out a few weeks ago but thought it was an interesting read nonetheless..
another one of the reasons why i never visit Vancouver during the summer, especially when it's cheaper to fly to Europe instead..
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Domestic airfares on upward path
A monthly survey shows airfares have risen sharply since 2003, at least during the busy summer months, but the country's two remaining major air carriers say passengers still receive good value for their money
September 01, 2007
Chris Sorensen
Business Reporter
Pat Georgiades, a Danforth Ave. travel agent, had a recommendation for clients seeking cheap flights from Toronto to Calgary, Edmonton or Vancouver this summer: Try Europe instead.
The owner of Rex Travel Agency Ltd. says domestic airfares offered by Air Canada and WestJet Airlines Ltd. in recent months were among the highest she has seen in years – a situation she blames on dwindling airline competition in Canada following the 2005 collapse of discount carrier Jetsgo, and the subsequent failures of Halifax's CanJet Airlines in 2006 and Vancouver's Harmony Airways earlier this year.
"Prices used to be a lot lower, but now they're up to $700 or $800 (return) to fly to Vancouver," said Georgiades, who has been in the business for 35 years. "I was checking last week for some clients and it was about $889, and that's without my service fee.
"We've got cheaper flights going to London."
While there are still deals to be had on several routes, particularly now that fall seat sales are starting to kick in, those who track airfares in this country say that, with just two carriers to choose from on many routes, Canadians are paying significantly more to fly domestically during peak seasons than they did just a few years ago.
The airlines contend the hikes are justified in order to compensate for rising costs – particularly soaring fuel bills. Meanwhile, both Air Canada and WestJet claim to compete vigorously with each other on price, arguing that Canadians are receiving good value for their money when frequency of flights, lost luggage and on-time performance are taken into account.
But others say consumers seldom win in duopoly environments.
"The proposition that somehow we're in this happy place and everyone is just loving it is complete nonsense," said Doug Reid, a professor at Queen's School of Business.
"The current industry structure may be optimal for the incumbents, but it certainly isn't for the passenger."
There's little doubt the past two years have been good ones for WestJet and, to a somewhat lesser extent, Air Canada. Both are making money thanks to near record demand for air travel. And while high fuel prices have hurt the bottom line, they've had the positive benefit of helping to snuff out weaker competitors such as Jetsgo, CanJet and Harmony.
Marc-David Seidel, a business professor at the University of British Columbia's Sauder School of Business, agrees with the airline's claims about the quality of air service in Canada, but notes it tends to come at a price. "If you compare similarly-distanced routes in Canada versus the U.S., the differences are drastic," he said.
U.S. low-cost carrier JetBlue Airways, for example, operates a similar business model to WestJet's and this week had flights available for travel this weekend – leaving Friday evening and returning Monday night – between New York and Los Angeles (Long Beach) for as little as $179 (U.S.) one-way. The fares are no doubt intended to protect JetBlue's market share following the launch earlier this month of Virgin America, the brainchild of Sir Richard Branson.
By contrast, the cheapest fare available on WestJet between Toronto and Vancouver for travel on the same dates was $376 one-way.
Of course, it's impossible to draw reliable conclusions from a handful of random airfare samples. Airlines use complex computer systems to adjust prices in response to fluctuating demand. Fares for a given flight can change day-to-day, even hour-to-hour, as airlines try to maximize the amount of money that can be extracted from their customers. Ben Cherniavsky, an analyst at Raymond James, has been conducting a monthly airfare survey for several years recording the lowest advertised prices on a basket of routes during peak and off-peak departure times. While he acknowledges the survey is not scientific, he says it provides a glimpse at overall trends.
His data shows prices have been on the rise since 2003, particularly during the busy summer months.
A look at end of August bookings on seven major domestic routes during peak and off-peak times, shows WestJet's fares have cumulatively increased about 30 per cent over the four-year period. Air Canada's fares went up about 40 per cent over the same period.
The biggest spike, according the survey, occurred during the busy Christmas holidays, with the average price of a flight increasing by about 55 per cent between 2003 and 2006.
But Cherniavsky is also quick to point out that 2003 was a particularly tough year for airlines, which were still suffering the fallout from 9/11, as well as the outbreak of SARS (Severe Acute Respiratory Syndrome). As well, he says the price of oil has risen substantially over the past four years, resulting in several across-the-board fare hikes by both Air Canada and WestJet.
Suffice to say, he isn't convinced consumers are getting a raw deal in 2007.
"Everyone in this country feels that they have some God-given right to low air fares," he said. "Never mind whether or not the companies who provide the service earn their cost of capital. Fares may be higher today, which would leave some to conclude that the environment is not as `competitive.' But is the alternative – namely, constant instability and one airline failure after another – any more desirable?"
Cherniavsky blames Ottawa for the industry's high costs, citing a report he co-authored published by the C.D. Howe Institute earlier this year. It charged the federal government with treating the industry as a cash cow through its airport rent policy and taxes on jet fuel.
Indeed, airline executives say operating an airline in Canada is an expensive proposition. In addition to a high tax environment, there's Canada's large geography and relatively tiny population. All that translates into longer average flights per aircraft and, as a result, fewer flights per day. Richard Bartrem, WestJet's vice-president of culture and communications, said the airline believes the Canadian market is fundamentally unable to support more than two major airlines. "Our assessment is that the Canadian domestic market is best served by two national carriers," Bartrem said.
Peter Fitzpatrick, an Air Canada spokesperson, said the country's largest airline competes "very intensely" on domestic routes. He also disputes the suggestion that flying today is more expensive than in previous years. "You can go on our website right now and book Toronto to Vancouver for $179."
Air Canada is right to argue that the current duopoly environment hasn't always come bundled with higher airfares.
A finding of the Raymond James airfare survey is that while average airfares were significantly higher during this year's peak travel season than last year or in 2003, fares during the slower winter months – January to March – were slightly cheaper than four years ago.
Whatever the case, Canadians appear stuck with an airline duopoly for the foreseeable future.
"I don't think you're going to see anyone go head-to-head with Air Canada and WestJet between Toronto and Calgary," said Reid, of the Queen's School of Business. "The lingering effect of Jetsgo is difficult to quantify, but it's so strong and so present because they failed so fast. Investors are just scared."
A more likely scenario, he said, is the entrance of smaller, niche players such as Toronto's Porter Airlines.
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source:
http://www.thestar.com/Business/article/252237
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| monishb |
http://www.flysunwing.com/ is a new charter flight
i know its expensive to fly as per the article but it is right for the price we pay its decent i would say considering fuel prices are high and to travel to london is the same distance almost from toronto to vancouver.
Oh how i miss harmony airlines was fantastic pricings.
sunwing is new charter flight i just paid for my moms ticket 482$ incl taxes etc. |
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| EvilTree |
| Westjet was around 500 one way to Edmonton from Hamilton. |
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| Irishaddict |
| quote: | Originally posted by EvilTree
Westjet was around 500 one way to Edmonton from Hamilton. |
i pay less than that to go to England :o |
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| Chris Allen |
This will eventually change but in the meantime it's absolutely brutal. A flight to the UK cost me under $500 after all taxes, direct and return. You can't even get to Calgary on that flight now.
I was inquiring about going to Hawaii and it was cheaper than flying to Calgary or Edmonton because it was out of Detroit: how ridiculous is that?
Canadian airlines need a swift kick in the ass as it's killing it's own travel scene for our country. Again though, it will eventually change as discount airlines feed into the country and the bigger airlines feel the pressure to compete (which is what happened in Australia).
Regardless, Canadian flights are a joke compared to European flights and even the US it seems. |
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| Cosmic Fur |
| Do the Canadians pay less than everyone else for ANYTHING? |
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| dEsidEL |
| quote: | Originally posted by Cosmic Fur
Do the Canadians pay less than everyone else for ANYTHING? |
sounds similar to arguments we've heard over our high rates in cell phone coverage and broadband access. I think the economics are similar in what the article pointed out about the fact that this country is so vast and the population being so small that it just doesn't make financial sense sometimes for these companies to offer lower rates on most types of services.
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| Misanthrope |
| quote: | Originally posted by Irishaddict
i pay less than that to go to England :o |
wow! you must be scoring some awesome deal.
Never heard of anything cheaper than $500!! lucky you! |
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| dEsidEL |
| quote: | Originally posted by Misanthrope
wow! you must be scoring some awesome deal.
Never heard of anything cheaper than $500!! lucky you! |
Air Transat and Zoom Airlines fly Toronto to London direct for under $500 during certain times of the year (usually off peak). I've found flights leaving as late as June once for about $435 (booked around April).
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| failsafe |
It always cracks me up as an Airline pilot to hear people complain about flight prices. Ignorance is bliss i guess. Those that complain obviously have no concept that the new 787's Air Canada just bought over 30 of cost over @200,000,000 EACH. How much do you have to make on each seat of a 100% full flight to pay one of those off? Does anyone who complains have even a slight idea of what the planes the 787s are replacing burn an hour for fuel? The 747's do over 12,000 liters an hour. Even if the 787 burns 1/2 of that you're looking at 6,000 liters an hour and the cost of owning a fleet of $200,000,000 planes. It's no small wonder that almost all of the North American airlines have gone bankrupt in the last 5 years.
Just for kicks I compared a Leaving tonight Greyhound ticket from Toronto to Edmonton. It costs $349.20
Air Canada Toronto to Edmonton tonight costs $322.
Grayhound takes 2 days 9hrs and 44 minutes to get there.
Air Canada does gate to gate in just a hair under 4hrs.
If you think plane tickets are too expensive you could always sit on a bus for 3 days and pay more for the experience. |
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| smuncky |
| quote: | Originally posted by failsafe
It always cracks me up as an Airline pilot to hear people complain about flight prices. Ignorance is bliss i guess. Those that complain obviously have no concept that the new 787's Air Canada just bought over 30 of cost over @200,000,000 EACH. How much do you have to make on each seat of a 100% full flight to pay one of those off? Does anyone who complains have even a slight idea of what the planes the 787s are replacing burn an hour for fuel? The 747's do over 12,000 liters an hour. Even if the 787 burns 1/2 of that you're looking at 6,000 liters an hour and the cost of owning a fleet of $200,000,000 planes. It's no small wonder that almost all of the North American airlines have gone bankrupt in the last 5 years.
Just for kicks I compared a Leaving tonight Greyhound ticket from Toronto to Edmonton. It costs $349.20
Air Canada Toronto to Edmonton tonight costs $322.
Grayhound takes 2 days 9hrs and 44 minutes to get there.
Air Canada does gate to gate in just a hair under 4hrs.
If you think plane tickets are too expensive you could always sit on a bus for 3 days and pay more for the experience. |
and if u buy the bus ticket one day in advance its $167. so which is cheaper? btw, u also forgot taxes and such. its $200 cheaper by bus when u include taxes and charges into both of those prices.
btw, i wouldn't compare those two types of travel, cuz they are totally different. same as comparing crossing the atlantic by ship or by plane. two toally different things. |
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| loca |
| quote: | Originally posted by failsafe
It always cracks me up as an Airline pilot to hear people complain about flight prices. Ignorance is bliss i guess. Those that complain obviously have no concept that the new 787's Air Canada just bought over 30 of cost over @200,000,000 EACH. How much do you have to make on each seat of a 100% full flight to pay one of those off? Does anyone who complains have even a slight idea of what the planes the 787s are replacing burn an hour for fuel? The 747's do over 12,000 liters an hour. Even if the 787 burns 1/2 of that you're looking at 6,000 liters an hour and the cost of owning a fleet of $200,000,000 planes. It's no small wonder that almost all of the North American airlines have gone bankrupt in the last 5 years.
Just for kicks I compared a Leaving tonight Greyhound ticket from Toronto to Edmonton. It costs $349.20
Air Canada Toronto to Edmonton tonight costs $322.
Grayhound takes 2 days 9hrs and 44 minutes to get there.
Air Canada does gate to gate in just a hair under 4hrs.
If you think plane tickets are too expensive you could always sit on a bus for 3 days and pay more for the experience. |
And yet Air Canada's service is still passable at best, won't let you take small dogs in cabins (this goes for long as well as short haul), and lack a LOT of the things that other airlines which are cheaper have. Air France for example, who might i mention just bought A380s, have cheaper prices than Air Canada by a lot! Earlier this year i looked into flying from YYZ to Charles Mohammed National (Casablanca airport) off peak. AC was asking for well over a grand for it, in fact i believe it was close to 2 grand for the round trip. I then looked at AF who was offering the round trip for approx $700, flying in a great plane, with friendly (and i do stress this) staff, more leg room, better food, and personal TVs. Not to mention the fact that they still allow you to bring a dog weighing under 10lbs in the cabin. The waiting time in between planes from Paris to Casa was also far less than AC.
I was going to point out what Smuncky said but i see he beat me to it so no need to repeat that. I just think we're being ripped off over here when you compare the prices to the ones in Europe but whatever, i'd rather take the train or my own car from TO to Vancouver before i paid the exhorbitant rates of AC. |
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