MONTREAL - The cost of flying took off last year, even excluding additional fees and charges, as Canada's main airlines hiked average fares by 5.3 per cent amid the economic rebound.
Statistics Canada reported Monday that the average domestic and international one-way airfare paid by passengers was $243.50 in 2010, up from $231.20 in 2009.
After a tough 2009, when the global economy was just emerging from the last recession, a rebound late in 2010 helped boost travel demand and lift the price of flying.
"The 2010 increase in average fares across all sectors can be largely attributed to the gradual upturn of the global airline industry during the period," said the agency report.
Price increases were strongest in the third and fourth quarters of the year.
The average domestic airfare paid by passengers was $182.50 in 2010, up 5.5 per cent from $173.00 in 2009.
The average international airfare increased 1.7 per cent to $331.80 in 2010 from $326.30 in 2009.
The survey tabulated information provided by Air Canada (TSX:AC.B), its regional code-share partners including Jazz (TSX:CHR), Air Transat (TSX:TRZ.B) and WestJet Airlines (TSX:WJA).
Bruce Cran of the Consumers Association of Canada said carriers' airfares only provide a partial picture of the growing cost of flying.
Passengers have increasingly faced a series of other charges for fuel surcharges, baggage fees, airport improvement, security and taxes. Some airlines also charge for ticket changes, food and seat selections.
"There's no control over what airlines charge at all and some of their rates have been very substantially raised over the last years," he said from Vancouver.
Cran said most passengers would much rather have functional airports than massive expansions to provide shopping and other ancillary services.
Also putting pressure on airfares, especially for overseas travel, is the lack of competition.
Statistics Canada doesn't yet measure non-airfare fees but has been asked to do so, officials say.
In the United States, airlines collected US$1.5 billion in fees for luggage and reservation changes in the second quarter. That was up 8.5 per cent from the previous quarter and one per cent higher than a year earlier, according to the U.S. Bureau of Transportation Statistics.
The airline industry argues that it is a very low-margin business that is hurt by health epidemics, environmental disasters and economic turmoil that is beyond its control.
Rising fuel costs eat away at meagre profits, forcing companies to find new revenue streams, some of which are only accessed by passengers choosing specific services.
Airlines have criticized high security and airport landing fees that make the cost of flying from Canada much greater than from the United States.
A new $5.50 fee to fly to the U.S. will only encourage more travellers to drive to nearby U.S. airports to catch flights, added Cran.
A one-way flight from Montreal to Vancouver adds $100 to the base fare of $239, while a flight to London, England adds $249 to the $1,134 economy fare.
Robert Kokonis, president of airline consulting firm AirTrav Inc., said airlines increased their domestic fares because they don't have fuel surcharges. Transborder surcharges were only added last spring.
He said airlines will try to preserve airfares despite an economic slowdown by managing capacity. Fares may face some weakness, however, in highly competitive markets like winter travel to sun destinations.
If the weakened economy limits further fare increases, the carriers may reintroduce surcharges for flights within Canada if fuel prices continue to rise above US$110 to $120 per barrel, he said in an interview.
Toronto remained the most expensive gateway at $205.20, while Edmonton was the lowest at $160.80. Increases were lowest in Halifax while fares from Vancouver increased by more than nine per cent.
Business fares sustained the largest growth as that index increased 8.4 per cent. The economy fare index increased 1.5 per cent from 2009, reversing a 7.7 per cent decline during the 2009 economic recession.
Despite the fare increases, Stats Can said domestic and international airfares remained well below pre-downturn levels in 2008.
"Some factors that may explain the situation are the competitive nature of the airline industry," said the report.
Airlines face competition from low-cost carriers, but "bargain-basement" ticket prices offered in 2009 largest vanished. But Internet shopping has pushed carriers to aggressively price fare to cost-conscious travellers.
The number of travellers using discount fares continued to grow, rising by 2.8 per cent. Nearly 97 per cent of passengers paid a discounted fare last year, up from only about 50 per cent when Stats-Can began its survey in the early 1980s.
© The Canadian Press, 2011