High Fuel Prices Impact Air-Travellers

Photo by Doug
Photo by Doug

Air Canada is cutting six of its flights because of soaring fuel prices and half of them are from Calgary. Meanwhile, WestJet has raised its fares to offset the higher costs.

On March 4th, Air Canada introduced fuel surcharges on its Canada-U.S. flights. On March 17th, the Calgary Herald noticed, Air Canada announced it will cut the following routes starting May 1st: from Ottawa to Thunder Bay; from Ottawa to Dulles International Airport in Washington; from Montreal to Dulles International Airport in Washington; from Calgary to Chicago; from Calgary to San Francisco; and from Calgary to London, ON.

Air Canada’s move also means that it will offer fewer seats than planned by cutting flight frequencies and routes or using smaller planes. It expects capacity to grow by 4.5 per cent to 5.5 per cent compared with last year, instead of the 5.5 per cent to 6.5 per cent range that it had predicted on February 10th. The changes affect less than 1 per cent of Air Canada’s total flights and the number of seats available will still be higher than last year.

Rick Erickson of aviation consulting group RP Erickson & Associates claims that increasing fuel prices will also have an impact on other routes. “That’s the nature of the airline business. Not all routes are good,” he said. “When times are good, you can afford to carry the wounded sheep. When times aren’t, you can’t.”

WestJet prefers to increase fares rather than add fuel surcharges. It believes this approach to be more transparent, so it raised base fares three times in the past year and a half, although not in 2011. “Clearly, we need to watch what’s going on with the cost of energy,” WestJet CEO Gregg Saretsky said in an interview this week. WestJet has delayed delivery of six planes until later in the decade.

It is expected the rising fuel costs are likely to slow the airline industry’s rebound.

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