Aviation
Air Fares, Canadian Air Carriers, Level I, 2016

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Highlights

• In 2016, domestic and international air fares combined averaged $227.90, down 5.4% from 2015. This marked the third consecutive annual decline following a year-over-year increase in 2013 (+0.2%). The decrease in 2016 was mainly the result of year-over-year declines in all quarters, with the most notable drops occurring in the first (-8.8%) and second (-7.2%) quarters.
• The average domestic fare was $167.50, down 5.2% from the previous year, while the average international fare fell 7.1% to $292.00.
• In 2016, the proportion of passengers on domestic and international scheduled flights who flew on discount fares remained unchanged (98.1%) from the previous year. The proportion of domestic passengers on discount fares was 98.0%, up 0.1 percentage points from 97.9% in 2015. On international flights, the share of passengers flying on discount fares declined 0.2 percentage points to 98.2%.
• In terms of passenger-kilometres, the proportion of domestic discount travel did not change from 2015, remaining at 98.0%. The share of international discount travel edged down 0.1 percentage points from the previous year to 98.7% in 2016.
• In 2016, average domestic air fares declined in all 10 selected Canadian cities of enplanement compared to 2015, with Halifax (-8.3%), Saskatoon (-7.6%), Winnipeg (-6.5%) and Montréal (-6.2%) recording the largest declines.
• For the first time since 1993, Vancouver ($192.40) edged out Toronto ($191.80) as the city with the highest average domestic air fare, while Saskatoon ($144.30) remained the city with the lowest average domestic air fare. Vancouver, Toronto and Winnipeg remained the cities having posted average domestic air fares above the national average ($167.50).

Analysis

Average air fares^Note 1

The airline industry continued to see increased demand for air travel in 2016 for the seventh consecutive year following the economic slowdown of 2009. During this period, the average air fare for domestic and international travel combined (on a coupon origin-destination basis) was $227.90, down 5.4% from 2015. This marked the third consecutive annual decline following a year-over-year increase in 2013 (+0.2%). The average total air fare registered in 2016 represented the lowest level since the recession in the early 1990’s. In 2009, the year of the economic slowdown, it had reached $231.20. The decrease in 2016 was mainly the result of year-over-year declines in all quarters, with the most notable drops occurring in the first (-8.8%) and second (-7.2%) quarters.

The average domestic air fare was $167.50 in 2016, down 5.2% from $176.70 in 2015. This marked the fourth consecutive annual decline, following three consecutive yearly increases.

The average international air fare was $292.00 in 2016, down 7.1% from $314.40 in 2015.

As shown in Chart 1, the average domestic air fare has steadily declined since 2012, and fell below the average air fare registered in 2009, the year of the economic slowdown. The aggressive and competitive nature of the airline industry continues to be a factor that may explain the situation. The substantial price competition from Canadian low-cost carriers translated into limited ability for the major airlines to increase fares. Economic weakness in the western provinces, mainly in Alberta, and the decrease in fuel prices may have also translated to lower fares. Furthermore, the growth and competitiveness of Internet distribution channels continue to push air carriers to more aggressively price their products to cost-conscious travellers.

In the international sector, the average air fare fell for the third consecutive year, reaching its lowest level since 1986 ($284.20). The continued increase and intense competition amongst Canadian and foreign carriers in international markets, and the expansion of low-cost flights in select leisure destinations in the United States, as well as in other international leisure markets where demand is highly elastic and responds positively to lower prices are among the factors that may have contributed to the decrease in the international fares.

Average domestic air fares at the city level

In 2016, average domestic air fares declined in all 10 selected Canadian cities of enplanement compared to 2015. During this period, year-over-year decreases ranged from 2.6% in Regina to 8.3% in Halifax. Vancouver ($192.40) took the lead as the city with the highest average domestic air fare, edging out Toronto ($191.80) which had reported the highest fares since 1993. These two cities were followed by Winnipeg ($170.90), Montréal ($160.80) and Halifax ($160.60). Saskatoon ($144.30) posted the lowest average domestic air fare. Higher fares in Vancouver and Toronto can be partly explained by the fact that more long-haul flights—which are more expensive—leave from Vancouver International Airport and from Toronto’s Pearson International Airport.

As shown in Chart 2 below, Toronto was the only selected eastern Canadian city of enplanement to register an average domestic air fare above the national level ($167.50) in 2016. During the same period, Vancouver and Winnipeg were the only selected western Canadian cities 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.

The air fare index is no longer included in this publication as of reference year 2012. However, this data series can be found in CANSIM table 329-0078.

Notes on air fares

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 2016, the air carriers included are the Canadian Level I carriers (Air Canada (including Air Canada Rouge beginning in July 2013), Jazz, Air Canada’s Canadian regional code-share partners, Air Transat and WestJet).

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 and group.
• Other: Represents industry and agency discount fares, military as well as unknown fare codes.

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 are base fares and they do not include the Goods and Services Tax, 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 call (1-866-500-8400) or e-mail Client Services at STATCAN.TransportationStats-StatistiqueduTransport.STATCAN@canada.ca.