MONTREAL — Air travellers should see further dips in fares this year after sizable drops in 2015 as lower fuel prices are passed along to consumers, according to a leading industry association.
The International Air Transport Association says average fares around the world as reported in U.S. dollars fell about 12 per cent last year, or by four to 4.5 per cent adjusted for distortions caused by the strong appreciation in the U.S. currency.
Although decreases in adjusted fares stabilized towards the end of the year, the association says competitive pressures within the industry will likely translate intro further fare declines in the first half of the year as currency hedges unwind.
Crude oil prices have rallied in recent weeks but are still about 30 per cent lower than they were a year ago.
In Canada, average domestic round-trip prices rose two per cent month over month to $457 in February after having dropped 7.3 per cent in January, according to the Consumer Airfare Index from airfare prediction app Hopper. International fares were up 4.2 per cent to $804.
However, compared with February 2015, domestic fares were down 2.5 per cent while international fare were essentially flat. Both decreased about 11 per cent in U.S. dollars.
See all of the World’s Worst Airlines for Customer Service Score: 75.094 Panama’s national airline gets good marks for on-time flights, but a few angry dings for its handling of passengers. “COPA is a great airline but the customer service is horrible,” wrote one T+L reader. Other travelers took issues with some of the airline’s fee policies. “@CopaAirlines is the only airline that charges for babies,” said one flyer on Twitter. “Lots of options now, buddy…#AvoidCopa.” The airline’s website confirms the fee for international flights, stating that “[i]f the infant is traveling in the adult's lap, the charge may be equivalent to 10% depending on the published fare of the adult plus the taxes that might apply.” Not the full fare, but still a bitter pill to swallow for traveling parents. Photo: © Nicholas Burningham / Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 75.000 Although there were a few complaints about Austrian Airlines on online air travel guide Skytrax—one traveler found the Austrian Airline’s staff at the airport in Innsbruck to be “particularly unhelpful and rude”—T+L readers were gentler with their comments, lauding the airline for having great food and an indulgent business class experience. One reader acknowledged, however, that other passengers might not have had as good of a flight, writing, “My rating may be skewed because I was upgraded to Business Class :)” Photo: vario images GmbH / Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 74.921 This South American airline group based in Santiago, Chile, received mixed marks from World’s Best Awards survey respondents. “Once a LAN plane is in the air it’s the best business class in the sky,” wrote one customer, noting the spacious layout of the brand’s 787s and excellent food and service. But the on-the-ground experience wasn’t reviewed nearly as well: “Takeoff delayed with no explanation. Agents give you the runaround, reserved seating not honored.” Reviewers on Skytrax also complained about changed flight times and poor communication, as well as a frustrating website and chaotic boarding process. Photo: Stefano Paterna / Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 73.478 Based in Calgary, WestJet is a low-cost Canadian carrier that’s been in the air since 1996. Although their website states a commitment to a “customer-first attitude,” actual customers sometimes tell a different story. “Seating comfort and room is lacking,” said one T+L reader. “At the desk, WestJet charged for our bags while telling us that they were saving us money,” said a SkyTrax user. “Some people find the corny jokes from the staff amusing. We prefer fewer (maybe better) jokes and better more efficient service.” Echoed another reviewer: “Flight crew were nice but definitely not professional.” Photo: Radharc Images / Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 72.544 Last year, 17 travelers complained to the Department of Transportation (DOT) about problems with Air Canada’s refunds. “3 family members on @AirCanada flight,” said @RayBee150. “Engine starts on fire. Emergency landing. Losing a day of vacation. Receive $20 meal voucher. #Brutal.” T+L readers and other travelers also complained about small, uncomfortable seating and unresponsive staff. “The service or lack of it is something that Air Canada needs to sort out asap,” wrote a SkyTrax reviewer. “All the staff looked like they would have preferred to have been somewhere else.” Photo: Torontonian/ Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 71.806 Nothing cramps a good trip like a lost bag. @TyDamasio documented the return of his backpack on Instagram. “Finally got my bag back a week later. #AirFranceSucks.” The Parisian translation of the derogatory hashtag has over 100 uses on Instagram. T+L readers seem to have had conflicting experiences, with some raving about the airline and others sharply criticizing inconsistencies in the rewards program, a problem that led one respondent, a former Air France Platinum member, to stop flying the airline altogether. Service at airports was also a problem for some readers: “Once the plane took off, business class was excellent. Food very good. Service very good. But on-the-ground customer service of Air France reps is dismal.” Photo: David Wall / Alamy Stock Photo
See all of the World’s Worst Airlines for Customer Service Score: 71.250 This small, Minnesota-based airline earned the number 5 spot in this year’s list of world’s best airlines for food, in no small part because of the fantastic selection of micro brews they serve onboard. But there may be room for improvement in other areas. The number of positive survey comments about the airline has sharply declined in the past few years, perhaps owing to the 2011 sale of the company and ensuing changes to its once raved-about loyalty program. Photo: Flyver / Alamy Stock Photo
Fares will fluctuate as demand picks up heading toward the busy summer season, but prices will remain low because the downward pressure from oil prices is so strong, said Patrick Surry, Hopper's chief data scientist.
Surry said global prices could fall three to five per cent in 2016.
He added that Canadian prices could dip more than those in the United States because American carriers have already been pushed by competition to pass along savings more quickly than in Canada.
"The mitigating factor in Canada is the competitiveness of the market is not necessarily as strong as some other markets so it may take longer for those price drops to filter through because the airlines obviously don't need to pass on their fuel savings right away," Surry said in an interview.
Walter Spracklin of RBC Capital Markets said Canada's two largest airlines have been lowering fares. The RBC Fare Tracker points to WestJet Airlines fares falling about 9.5 per cent in the first quarter, with Air Canada (TSX:AC) fares decreasing 3.7 per cent.
WestJet has lowered fares to stimulate demand and fill planes especially in Western Canada, its base which has faced an economic downturn. Discounting on Air Canada has largely been isolated to select transborder and domestic routes.
Despite lower fares, IATA said a nearly 60 per cent increase in global airline profits in the fourth quarter pointed to a strong year in 2015, led by North American carriers.