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 2.1% in 2011 after experiencing a 2.9% increase in 2010. All sectors recorded increases over this period which drove the all-fare index up from 89.7 in 2010 to 91.6 in 2011.
The business class fare index advanced 7.4% from 195.4 in 2010 to 209.8 in 2011, while the economy fare index edged down 0.5% from 2010 to 88.0 in 2011. The discount fare index increased 2.1% to 90.8 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 (96.8% in 2011).
During this period, the air fare index for all fares for domestic scheduled services was 91.3, up 4.2% from the 2010 level of 87.6. This notable increase was due largely to upturns in the business class fare index (+6.9%) and discount fare index (+4.6%). The all-fare index for international scheduled services posted an increase of 0.4% from 2010 to 91.7.
As shown in Chart 1, both the domestic and international all-fare indexes remained below the pre-downturn levels, but the gap between the two sectors has narrowed from 7.1 points in 2009 to 3.7 points in 2010 to 0.4 points in 2011.
Average air fares 1
The airline industry continued to see increased demand for air travel in 2011. During this period, the average air fare (all types, all sectors, on a coupon origin-destination basis) paid by passengers was $249.70, up 2.5% from $243.50 in 2010, continuing the upward trend experienced between 2009 and 2010, although to a lesser extent. The level reached in 2011 was mainly due to year-over-year advances in the first (+4.0%) and second (+5.9%) quarters.
The average domestic air fare (all types) paid by passengers was $190.70 in 2011, up 4.5% from $182.50 in 2010. This is the second consecutive annual increase after a strong decline (-11.9%) in 2009.
The average international air fare (all types) was $326.80 in 2011, down 1.5% from $331.80 in 2010.
As can be seen in Chart 2 below, despite the growth recorded in air fares in Canada in 2011—partly due to soaring fuel costs and a stronger economy—the average domestic air fares reached were still below the pre-downturn levels. Some factors that may explain the situation are the aggressive and 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 growth and competitiveness of Internet distribution channels have pushed air carriers to more aggressively price their products to the cost-conscious travellers.
In the international sector, the average air fares returned to its 2009 level, and remained well below the pre-downturn levels. The increased and intense competition amongst Canadian and foreign carriers in the international markets, the unfavourable worldwide economic conditions, especially in the United States and in the European markets are additional factors that may have impacted the ability of airlines to raise fares.
Average domestic air fares at the city level
In 2011, average domestic air fares increased across 9 of the 10 selected Canadian cities of enplanement compared to 2010. During this period, year-over-year increases ranged from 1.6% in Montréal to 6.5% in Calgary. Toronto remained the city with the highest average domestic air fare ($214.90), followed by Vancouver ($206.70), Ottawa ($194.80) and Montréal ($194.10), while Edmonton once again posted the lowest average domestic air fare ($170.00) in 2011. Higher fares in Toronto can be partly explained by the fact that more long-haul flights—which are more expensive—leave from Toronto's Pearson International Airport.
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 ($190.70) in 2011. 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 2011, 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.
Average air fares do not include GST, air transportation taxes or user fees such as airport fees or fuel surcharges.
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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