Airline fares set to soar this summer

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Now may be the best time for Canadians to buy airline tickets because fares are set to soar this summer, according to an industry expert.

John Gradek, faculty lecturer, supply networks, at Montreal’s McGill University, says Canada’s domestic fares will be significantly higher in July and August than they are today.

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“Deals are now,” he said in a recent interview with the Financial Post’s Larysa Harapyn. “They won’t be there in the summer.”

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Gradek said Canadians are currently enjoying the benefits of a domestic price war as airlines try to generate business in what’s typically a quiet quarter for air travel.

He said Canada’s two ultra-low cost carriers, Flair Airlines and Lynx Air, are leading the price cuts with other airlines following not too far behind.

“Flair and Lynx are the price leaders in Canada,” said Gradek. “Air Canada, WestJet, Porter are kind of playing along.”

The problem is that’s not likely to be sustainable.

Gradek said the ultra-low cost airlines are not making any profit off the current fares and it’s likely one of them will be subject to either bankruptcy or takeover.

Fuel pricing could also impact air fares. Sustainable aviation fuel (SAF) is a new fuel that’s being developed to reduce the industry’s emissions. Gradek said the industry is looking at different ways to minimize their costs, including hedging and advanced purchases of fuel.

“Fuel pricing will in fact very much impact the price of air fares,” he said.

The strong demand for travel and profitability for carriers seen last summer should repeat itself this year, said Gradek, with the only possible dampers being a recession and lower disposable income.

“It’s going to be busy,” Gradek said. “Fares will definitely be up there.”

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