Analysis
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Air fare indexes
The all-fare index (2002=100) for domestic and international (including Canada-United States) scheduled services operated by Canadian Level I air carriers (Air Canada, Jazz, Air Canada's Canadian regional code-share partners, Air Transat and WestJet) rose 2.9% in 2010 after experiencing an 8.8% decline in 2009. All sectors recorded increases over this period which drove the all-fare index up from 86.7 in 2009 to 89.2 in 2010.
The business class fare index advanced 8.4% from 175.4 in 2009 to 190.2 in 2010, while the economy fare index increased 1.5% from 2009 to 88.2 in 2010, reversing the significant 7.7% decline experienced during the 2009 economic recession. The discount fare index increased 2.8% to 88.4 and continued to drive the total all-fare index for the year. The discount fare index weight is relatively more important than the business class and economy fare index weights due to the high proportion of passengers travelling on discount fares (96.7% in 2010).
During this period, the air fare index for all fares for domestic scheduled services was 86.5, up 5.1% from the 2009 level of 82.3. This notable increase was due largely to upturns in the economy fare index (2.2%) and discount fare index (5.2%). The all-fare index for international scheduled services posted an increase of 0.9% from 2009 to 91.3.
As shown in Chart 1, both the domestic and international all-fare indexes remained below the pre-recession levels, but the gap between the two sectors has narrowed from 8.2 points in 2009 to 4.8 points in 2010.
Average air fares
The airline industry saw demand for air travel and consumer confidence gradually return in 2010, after a year of serious economic challenge and low passenger traffic. In 2010, the average air fare (all types, all sectors, on a coupon origin-destination basis) paid by passengers was $243.50, up 5.3% from $231.20 in 2009, reverting to the upward trend experienced between 2007 and 2008. The level reached in 2010 was mainly due to year-over-year advances in the third (+7.5%) and fourth (+6.9%) quarters.
The average domestic air fare (all types) paid by passengers was $182.50 in 2010, up 5.5% from $173.00 in 2009. This increase followed the strong annual decline (-11.9%) reported between 2008 and 2009.
The average international air fare (all types) was $331.80 in 2010, up 1.7% from $326.30 in 2009.
The 2010 increase in average fares across all sectors is reflected in Chart 2 and can be largely attributed to the gradual upturn of the global airline industry during the period. However, the airline industry in Canada has not been in a position to overcome all difficulties encountered in 2009, and consequently, despite the growth recorded in air fares in 2010, the air fares reached were still well below the pre-recession levels. Some factors that may explain the situation are the competitive nature of the airline industry—substantial price competition from Canadian low-cost carriers translated into limited ability for major airlines to increase fares; the major airlines continued to rely on seat sales, though the bargain-basement ticket prices offered during the economic downturn in 2009 have largely vanished, to persuade the travellers to take to the skies; the growth and competitiveness of Internet distribution channels have pushed air carriers to more aggressively price their products to the cost-conscious travellers.
Average domestic air fares at the city level
In 2010, average domestic air fares increased across all of the selected Canadian cities of enplanement compared to 2009. During this period, year-over-year increases ranged from 0.7% in Halifax to 9.1% in Vancouver. Toronto remained the city with the highest average domestic air fare ($205.20), followed by Vancouver ($199.20) and Ottawa ($196.00), while Edmonton once again posted the lowest average domestic air fare ($160.80) in 2010.
As shown in Chart 3 below, all selected eastern Canadian cities of enplanement, with the exception of Halifax, registered average domestic air fares above the national level ($182.50) in 2010. During the same period, Vancouver was the only western Canadian city of enplanement to register an average fare above the national level.
For historical annual data at the city level, please refer to the CANSIM table 401-0004.
Notes:
The estimates are derived from a sample of flight coupons collected as part of the Fare Basis Survey. The estimates relate to the operations of major Canadian air carriers. For 2010, the air carriers included are the Canadian Level I carriers (Air Canada, Jazz, Air Canada's Canadian regional code-share partners, Air Transat and WestJet). Imputation has been performed for incomplete and missing data.
For purposes of statistical tabulations, fare codes reported by the air carriers are grouped by general fare type. These fare types are defined as follows:
- First class: The transportation of a passenger or passengers for whom premium-quality services (e.g. larger seats, complimentary bar) are provided.
- Business class: A fare level which is less expensive than first class and more expensive than the basic fare level. It includes different amenities (e.g. larger seats, advanced seat assignment).
- Economy: A basic fare level which is less expensive than first class but does not include the amenities (e.g. larger seats, complimentary bar) of the first class fare.
- Discount: A reduced fare usually subject to one or more travel restrictions, the price of which is usually calculated as a percentage reduction from the normal full fare. It includes various discount fares such as charter class, seat sales, advance purchase excursion, group.
- Other: Represents industry and agency discount fares, military as well as unknown fare codes.
The air fare index is a measure of the rate of price change, providing indications of the overall trend of domestic and international fares over time, while average fares measure the actual level of fares paid by passengers. The different series of air fare indexes produced by the Aviation Statistics Centre were calculated on an annual basis using the chain Laspeyres index method linked at the annual level, with annual updated weights (the time base is 2002=100).
The average fare is obtained by dividing the carriers' revenue by the passenger volume, as measured by coupon origin and destination.
The average domestic air fares are the average for all coupons originating in that city, for all domestic destinations. The level of average fares can be affected by changes in travel patterns, as well as prices.
Additional information on Fare Basis statistics can be obtained directly from the Aviation Statistics Centre. Tables are available in print form or in electronic format. For further information, please contact the Aviation Statistics Centre (telephone: 1-866-500-8400; Internet: aviationstatistics@statcan.gc.ca).
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