Inflation may be descending elsewhere in the economy, but airfare (much like our flight puns in this story) is still flying high with no sign of landing any time soon.
Driving the news: Flight ticket prices are up 27.4% from last year, according to a Financial Times analysis of 600 of the world’s most popular routes.
- In contrast, the Consumer Price Index showed prices across the economy increasing 4.3% year-over-year in March.
Why it’s happening: People really want to travel, and they’re willing to pay big bucks for the privilege. Airlines, as you’d expect, are happy to oblige.
- Part of the increase in prices is a factor of airlines passing on higher costs of fuel and labour to customers, but much of it is supply and demand in action.
- That’s showing up on airlines’ balance sheet: American Airlines reported record revenue in the first quarter of the year and Air Canada upgraded its forecast ahead of its earnings report this week.
Yes, but: Airlines may be charging more, but there are still questions as to whether they’re prepared for the busy summer travel season
- There are still lingering shortages of pilots, air traffic controllers, and other critical workers across the sector.
- “Unless [the airlines] reduce their schedule, I do not foresee us having enough pilots for the summer,” an Air Line Pilots Association union leader told The Globe & Mail.
Bottom line: Travellers may tolerate higher prices, but another summer of airport chaos, lost luggage, and sitting on the tarmac for hours could finally dent Canadians’ post-pandemic wanderlust.