Canadians who swore off U.S. travel in response to tariffs are evidently quite serious about their pledge, and airlines are starting to feel the impact.
Driving the news: Delta, American, and United — the top three U.S. airlines — all issued warnings this week about lower profits and/or decreased demand. United’s CEO specifically called out a “big drop in Canadian traffic” as the airline looks to cut its Canadian flight capacity.
- Other factors were weaker U.S. consumer sentiment caused by trade war-related economic uncertainty and ongoing fears from scary plane crashes earlier this year.
Why it matters: From snowbirds flying away from Florida to bach parties ditching Nashville, Canucks are nixing trips to the U.S in economic retaliation. Considering that Canadians made 20 million trips last year, even a small shift in travel behaviour could hurt the U.S.
- Canadian travel contributed US$20.5 billion to the U.S. economy last year, per the U.S. Travel Association, meaning just a 10% decline would cause a $2.1 billion loss.
Yes, but: The trend also stands to hurt major Canadian airlines, as U.S. travel accounts for sizable chunks of their business. According to Centre for Aviation data, Air Canada and WestJet are the top two airlines for two-way flights between Canada and the U.S.
What’s next: Air Canada has already taken early measures to account for the travel shift, reducing flight capacities to Florida, Las Vegas, and Arizona this month. Porter Airlines responded by lowering U.S. fares ahead of an anticipated drop in bookings.—QH