VANCOUVER – Canadians planning a fall getaway could find cheaper flights as airlines compete for passengers after the busy summer travel season, even as airlines fly into fall in a real fix over the cost of fuel. Airline industry experts expect increased competition could lead to a price war this fall, as demand typically slows once Canadians return to work and school. But lower fares could compound the problems facing Canadian airlines, which are already absorbing a major increase in the cost of jet fuel. “This is just a very difficult time for the entire airline industry,” said Lorn Sheehan, an expert in tourism management at Dalhousie University. “And this industry has had to pivot and pivot and pivot again as we’ve had these global shocks.” Smaller airlines bear the brunt Fuel prices have doubled since February, when the United States went to war with Iran, which has turned up the pressure on airlines. That pressure is particularly acute for leisure carriers such as Air Transat, which are more exposed to fluctuations in fuel prices and have fewer high-margin business travellers to help offset higher costs. Transat reported a loss of $106.6 million for the three months ended July 31. Transat A.T. Inc., the parent company of Air Transat, announced Thursday it had secured an additional $250 million in federal financing to help offset the soaring energy costs. That follows a $150 million federal loan announced in July. Porter Airlines has also received government assistance, with a $125 million federal bailout loan, according to the Canada Enterprise Emergency Funding Corp. Experts say most airlines have cushioned the blow of soaring fuel costs by raising fares and could get away with it over the summer travel season with Canadians motivated to fly. “Now we’re in a situation where everybody’s back at work, back at school,” said John Gradek, a lecturer at McGill University’s aviation management program. “Now you’re in the doldrums.” Gradek expects airlines will have no choice but to lower fares to compete for passengers, despite fuel costs cutting deeply into profit. “There will be price wars in Canada, which means revenues will come down, which is not what you need when you are stuck with a fuel bill that keeps climbing,” he said. Flight prices are particularly pivotal for carriers, Sheehan said, because of brand loyalty, or the lack of it, when Canadians are searching for cheap flights. “Customers are very willing to generally switch to another airline if the price is cheaper,” he said. Gradek said he is already seeing what he calls some “spicy” fares for fall travel. That’s good news for travellers, but potentially bad news for airlines. Smaller carriers in particular, experts say, may be in serious trouble. “It may lead to some carriers not being able to survive the fall and winter,” Gradek said. With files from The Canadian Press
