Passenger traffic is robust and profits are at record levels for Canada’s two largest airlines as they benefit from the lowest prices for airline fuel since the 2008-09 recession.
Both Air Canada and WestJet Airlines Ltd. reported traffic increases through the first 11 months of 2015 – 10 per cent for Air Canada and 3 per cent for WestJet – based in part on low fuel prices that have allowed them to stimulate demand as they both add capacity.
But a key question is whether passenger growth will continue rising in 2016 to match capacity increases amid the downturn in oil prices that is helping deliver huge cost savings, but also giving airlines a currency headache and affecting traffic originating in and travelling to the oil patch.
“I don’t think either of these guys blink right now,” when it comes to adding routes and flights, said industry analyst Ben Cherniavsky, who follows the airlines for Raymond James Ltd. in Vancouver.
“We believe both carriers are deploying a great degree of price discounting to keep flights full,” Mr. Cherniavsky added in a note to clients. “We have seen this both anecdotally – with lots of different seat sales and promotions offered lately – and empirically – with our monthly domestic airfare survey declining yet again in November.”
WestJet chief executive officer Gregg Saretsky has already said that his airline intends to keep adding capacity, with growth of between 8 per cent and 10 per cent in 2016.
Most of that will come from the expansion of the carrier’s Encore network and the addition of four wide-body planes that will begin flying to London from several Canadian cities in May.
The expansion is possible in part because of the decline in fuel prices, which has saved the world’s airlines more than $89-billion (U.S.) this year, according to data compiled by the International Air Transport Association (IATA).
That drop will also contribute to combined profit of $19.4-billion in 2015 for North American airlines, and another $19.2-billion in 2016, IATA reported. Capacity will grow in North America by another 4.8 per cent in 2016 on top of a 3.7 per cent bump in 2015, based mainly on the stronger U.S. economy, the organization said.
The growth is evident in passenger numbers released by airports. Pearson International’s annual traffic in Toronto just surpassed 40-million travellers for the first time. And Vancouver International Airport said a record 20-million people have passed through its terminal in 2015.
While low fuel prices provide a strong tailwind for all airlines, some of the advantage for the Canadian carriers has been diminished by the fall in the value of the Canadian dollar that has accompanied the oil price drop.
“If Air Canada and WestJet were in a country denominated by U.S. dollars, we could take all that fuel-price savings and take it right down the line and pass on a lot more to customers,” said industry analyst Robert Kokonis, president of Toronto-based AirTrav Inc. But the two carriers are passing on some of the decline in fuel prices in the form of lower fares, Mr. Kokonis said.
The bulk of Air Canada’s traffic growth through the first 11 months of 2015 came from international passengers and those travelling to and from the United States, despite the decline in the value of the Canadian dollar.
WestJet’s international traffic was given a boost by the addition of transatlantic flights, and bookings for the first wide-bodied flights across the Atlantic are strong, officials have said.
Mr. Cherniavsky said the airlines need to move cautiously when adding new flights and new destinations.
“I get it that you’ve got this big windfall that allows you to lower fares and bring on more capacity,” he said. But “the more they go down the road of adding seats and planes and people to stimulate traffic with low fares, the harder it’s going to be to get off that vicious cycle.”
The Globe And Mail
Flights delayed at Toronto Pearson because of fog
Operations at Toronto’s Pearson airport are back to normal after thick fog caused delays to a number of morning flights on one of the busiest days of the travel year.
Some flights were delayed due to low visibility, but just after 9 a.m. ET, an airport spokesperson told CBC News that flights were departing and arriving normally.
There will, however, likely be residual delays today, and passengers are advised to check their flight status online before heading to the airport.
Earlier Wednesday morning, CBC meteorologist Johanna Wagstaffe arrived at Pearson from Vancouver, and said the fog was slowing things down.
“We’ve got a vertical visibility of only about 20 metres and horizontal visibility of only about 20 metres as well, so a lot of planes weren’t even getting in for the better part of the morning.
The fog led to difficult driving conditions for much of southern Ontario on Wednesday morning.
Environment Canada had issued a fog advisory and police have warned drivers to slow down with near-zero visibility in some areas.
Pearson is Canada’s largest and busiest airport, handling about 400,000 flights and more than 38 million passengers a year.
Traditionally, travel ramps up in the days leading up to Christmas.
CBC News
Fly to Cuba from Montreal for under 300$ with Air China!
MONTREAL | Air China becomes cheap tour operator from Montreal. Three times a week, flights will depart from Beijing on the same day to Havana, Cuba, for as little as $ 150 to $ 300 depending on the site chosen.
This unbeatable promotional begin on 27 December and will offer departures on Tuesdays, Fridays and Sundays during the winter.
“Air China saw the potential market, since there is no direct flight between Beijing and Havana, far too long. The planes landing in Montreal can therefore leave 2 hours 40 later, with travelers to Cuba and return the next day to catch a flight from Montreal to Beijing, “said the spokesman of Air China, Li Yufu Florian.
In a press release, Air China said that ties between China and Cuba are tightly tightened in recent years and that this destination will enhance economic, trade and cultural cooperation between the two countries, in addition to stimulating the Asian tourism to Cuba .
Air China also wants to offer residents of the Caribbean to borrow the Havana connecting flight, then travel to Beijing from Montreal.
First Chinese
Air China believes that flights to Havana will be used by many Asians who choose to go through Montreal before a sun destination. It calculates that 50% of places are already occupied by Chinese and Cubans who want to visit their families.
The destination to Havana will be by the same device that performs the Beijing- linking Montreal, a Boeing 777-300 with a capacity of 311 seats. Passengers will be entitled to free drinks and meals during the flight, as well as two pieces of luggage of 23 kg at no extra charge, in addition to the carry-on bag.
Air China has signed agreements with some travel agencies specializing in flights to Asia, but will also sell tickets directly from its website.
Comparative price
Return flights for a week (without accommodation package)
– Sunwing, starting December 28, 2015: 825$ (arrival in Varadero)
– WestJet, starting in January:495$ to 816$
– Air Transat departing in January: 578$ to 750$ (arrival in Varadero)
– Cubana Airlines, starting in January: 738$
Le Journal de Montréal (via Google Translate)
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