COVID-19 BC: Travel prices rise for summer recovery

Demand for cheap flights explodes as savings-rich Canadians seek luxury travel

A ‘perfect storm’ has formed to pinch travelers’ wallets this summer, according to Sushant Trivedi: pent-up demand to get out of town, rising fuel costs for airlines and ground transportation, and acute labor shortages driving up tourism industry wages.

“The cost of travel has increased slightly this year compared to last year as well as before COVID-19,” said Trivedi, CEO of travel agency Fresh Tracks Canada Ltd., whose Vancouver-based company is specializes in tailor-made travel for Canadian destinations. (about 80 percent of customers are American).

Even before we enter the peak travel season this summer, the latest data from Statistics Canada reveals that the cost of plane tickets rose 16% last May compared to 12 months earlier. At the same time, headline inflation jumped to 7.7%.

While it may come as a shock to Canadians embarking on trips this summer for the first time since the pandemic, Trivedi believes an even bigger price increase is yet to come.

“Think of 2022 as boot camp,” he said, noting that travel opened up relatively suddenly this year as restrictions eased, leaving tourists and operators to learn on the fly.

With problems in the system – everything from havoc at airports to uncertainty over his vaccination status – hopefully resolved by next year, Trivedi believes travel demand will rise in 2023 and will do even more. raise prices.

“Once people have their first trip under their belt, they see it’s not as difficult as they think it is,” said Lisa Bain, senior leisure travel advisor at Forbes Travel International Ltd. in Vancouver.

She began to see a resurgence in customer interest in traveling overseas last fall. Most of those destinations, Bain said, were “bucket list” places like Italy, France and Tahiti — already relatively expensive before the pandemic.

“Now they’ve accumulated extra money or just a desire to see places that maybe they would put off until they were older,” she said.

But what these customers discover is that last-minute deals no longer exist.

“People should take advantage of early booking bonuses by booking six months in advance and getting those discounts to confirm your space,” Bain said.

“The only way it’s [higher prices] will subside if… the airlines start adding more flights to the routes.

Air Canada (TSX:AC) revealed late last month that it would be canceling 154 flights a day in July and August as it tries to cope with unprecedented demand for air travel. Last-minute flight cancellations and understaffed operations are the norm for many Canadian travelers.

A day after Air Canada’s announcement, WestJet Airlines Ltd. (TSX:WJA) said in a blog post that it had “proactively reduced capacity” over the past few months and would operate 21% fewer flights in July 2022 than in July 2019.

WestJet also announced plans to hire 1,000 additional workers.

Meanwhile, demand for domestic air travel is now up 64% from pre-pandemic levels, according to Google data provided to VBI. Demand for international flights has also increased by 35% compared to pre-pandemic levels.

“It’s definitely not business as usual in travel, that’s for sure,” said Marshall Self, chief financial and travel officer of Toronto-based Google, which works with carriers like Air Canada and airlines. booking services like (JustFly Inc.).

“There is less supply and a lot of demand chasing her. Of course, this leads to inflation.

But Self said the industry faces a “two-city narrative” when it comes to travel: many people are looking for cheap flights during a time of high inflation, while interest in expensive luxury travel is “booming”.

Self doesn’t expect an imminent price drop, but said it’s also possible capacity will increase by the end of the year.

“Inflation, rising interest rates, is that potentially slowing things down in terms of demand interest in the fall? Potentially.”

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