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) dropped 8.8% in 2009 after experiencing a 2.5% increase in 2008. All sectors recorded decreases over this period which drove the all-fare index down from 95.1 in 2008 to 86.7 in 2009.

The business class fare index advanced 7.0% from 163.9 in 2008 to 175.4 in 2009, albeit at a much slower pace than the 18.8% and 13.7% year-over-year increases posted in 2007 and 2008, respectively. The economy fare index went down 7.7% from 2008 to 86.9 in 2009, while the discount fare index dropped 8.8% to 86.0 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 (96.6% in 2009).

During this period, the air fare index for all fares for domestic scheduled services was 82.3, down 11.6% from the 2008 level of 93.1. This sharp drop was due largely to substantial declines in economy fare index (-14.2%) and discount fare index (-11.4%). As shown in Chart 1, the domestic all-fare index reached its lowest level in five years (it was, in fact, its lowest level since 1998), dropping 8.2 points lower than the international all-fare index. The attenuation in the domestic sector was largely attributable to the frequent air fare price reductions and seat sales air carriers offered in efforts to stimulate traffic during the economic recession.

The all-fare index for international scheduled services posted a decrease of 6.2% from 2008 to 90.5. 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).

Chart 1

Air fare indexes — All fares, by sector, 2005 to 2009

Average air fares

In 2009, the average air fare (all types, all sectors, on a coupon origin-destination basis) paid by passengers was $231.20, down 9.7% from $256.10 in 2008, reverting to the downward trend experienced between 2006 and 2007. The fare decrease in 2009 represented the strongest year-over-year decline since the sharp retreat reported between 2002 and 2003 (-11.8%). The impacts from the recession, the slowdown in passenger traffic and increased competition amongst carriers explained the decrease in air fares in 2009.

The average domestic air fare (all types) paid by passengers was $173.00 in 2009, down 11.9% from $196.30 in 2008. This decline followed the 3.8% rise between 2007 and 2008. As can be seen in Chart 2 below, the average domestic air fares registered between 2005 and 2008 fluctuated in the $190.00 to $197.00 price range only to fall dramatically in 2009. The average domestic air fare registered in 2009 was approximately at the same level as the average domestic air fares posted in 1989 ($174.40), in 1992 ($177.90) and in 1996 ($177.00). The levels in 1992 and 1996 were also explained by similar factors (carriers tried to boost the declining passenger volumes after the 1990-1991 recession by offering more discounted fares, introduction of new scheduled services in 1996 by carriers that featured regular low air fares which were quickly matched by the major carriers on competitive routes).

The average international air fare (all types) was $326.30 in 2009, down 8.1% from $355.00 in 2008. This decrease followed the 3.8% rise between 2007 and 2008.

Chart 2

Average air fares — All fares, by sector, 2005 to 2009

Average domestic air fares at the city level

In 2009, average domestic air fares declined across all of the selected Canadian cities of enplanement compared to 2008. ¹ During this period, decreases ranged from -8.0% in Ottawa to -15.6% in Calgary. Toronto remained the city with the highest average domestic air fare ($194.40), followed by Ottawa ($189.30) and Vancouver ($182.60), while Edmonton posted the lowest average domestic air fare ($154.20) in 2009.

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 ($173.00) in 2009. In 2009, all selected western Canadian cities of enplanement, with the exception of Vancouver, registered average domestic air fares below the national level.

Chart 3

Average domestic fares for selected eastern and western Canadian cities of enplanement, 2008 and 2009

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 2009, 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).