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) climbed 2.5% in 2008 after experiencing a 1.6% decline in 2007. All sectors recorded increases over the period which drove the all-fare index from 92.8 in 2007 to 95.1 in 2008.
The business class fare index posted the largest increase, rising 13.7% from 2007 to 163.9, followed by the economy fare index, which rose 9.9% to 94.1 in 2008. The discount fare index posted the smallest year-over-year increase (+2.1%) but continued to be the driving force behind 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 (96.9% in 2008).
In 2008, the air fare index for all fares for domestic scheduled services was 93.1, up 1.6% from the 2007 level of 91.6. This growth was attributable to a slightly higher discount fare index (+1.2%) and a 10.1% increase in the economy fare index.
The all-fare index for international scheduled services posted an increase of 3.1% from 2007 to 96.5. As shown in Chart 1, there has been some fluctuation in the international air fare index within the past five years, 2005 being the lowest rate (90.3). Between 2004 and 2008, the international all-fare index advanced at a slower pace (+3.5%) than the domestic all-fare index (+7.3%).
Average air fares
In 2008, the average air fare (all types, all sectors, on a coupon origin-destination basis) paid by passengers was $256.10, up 3.8% from $246.70 in 2007, reverting to the upward trend experienced between 2004 and 2006. The fare increases recorded in the first three quarters of 2008 more than offset the moderate deceleration in the fourth quarter. As can be seen in Chart 2 below, the average air fares, for domestic and international sectors combined, registered in the last five years remained relatively at the same levels. This can be partly explained by the expansion of services by low fare airlines with low-cost structures and the continuing fare competition between the major "legacy" scheduled carriers and the low-cost carriers or charter carriers.
The average domestic air fare (all types) paid by passengers was $196.30 in 2008, up 3.3% from $190.00 in 2007. This increase followed the 1.0% decline between 2006 and 2007 and the strong annual progression reported between 2004 and 2006 (+6.3%).
The average international air fare (all types) was $355.00 in 2008, up 3.8% from $342.10 in 2007. This increase followed the 2.3% decline reported between 2006 and 2007.
Average domestic air fares at the city level
In 2008, average domestic air fares increased across most selected Canadian cities of enplanement compared to 2007 1 . Toronto, Vancouver and Ottawa remained the cities with the highest average domestic fares in 2008. In Toronto, the average domestic fare rose by 1.0% to $219.80, followed by Vancouver (+2.4%) to $209.10 and Ottawa (+2.9%) to $205.80. Edmonton reported the largest increase in average domestic air fare (+5.2%) moving from $171.50 in 2007 to $180.50 in 2008. Halifax also showed strong growth in average domestic air fare, rising 4.6% to $197.20 during this period. From 2007 to 2008, only Montreal posted a decrease (-0.4%).
As shown in Chart 3 below, in each year between 2004 and 2008, all selected eastern Canadian cities of enplanement, with the exception of Halifax from 2004 to 2007 and Montreal in 2008, registered average domestic air fares above the national level. During the same period, all selected western Canadian cities of enplanement, with the exception of Vancouver, registered average domestic air fares below the national level. From 2004 to 2008, average domestic air fares advanced in all eastern and western cities. Halifax posted the highest increase (+19.0%), followed by Calgary (+12.2%) and Edmonton (+11.6%).
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 2008, 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 Laspreyres 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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