Air Canada says demand spurs high fares
Ticket prices across the industry have edged higher partly due to a scarcity of aircraft
Surging demand for air travel, particularly in business and first class, is set to continue, keeping ticket prices elevated, according to a senior Air Canada executive.
“Business class and premium economy for Air Canada recovered more quickly than economy,” Mark Nasr, the airline’s vice-president, marketing and digital, said in an interview in Tokyo on Tuesday. “We are now seeing demand structurally higher in the premium cabins than it was prior to the pandemic,” as people splurge on special events like weddings and family reunions, he said.
“We are optimistic certainly, and if the mindset has truly structurally changed, even in a potential recession scenario that will be good for the travel industry.”
Strong advanced bookings, limited capacity and higher fuel prices will underpin high fares, with the airline “seeing a favourable yield environment,” Nasr said. “We will always remain competitive with the market. We believe we are currently competitive as well on the pricing side and of course from the product side.”
Ticket prices across the industry have been edging higher, partly because of robust demand for holiday travel, and partly because of a scarcity of aircraft as airlines clamour to get hold of new models. Qantas Airways Ltd. said Tuesday air-travel demand will outstrip available seats for the foreseeable future, and carriers from Deutsche Lufthansa AG to Air France-KLM have seen leisure customers crowd into the business-class section of the cabin, offering a respite as corporate travel still lags after the pandemic.
Addressing the impact of complications surrounding geared turbofan engines manufactured by Pratt & Whitney, a unit of Raytheon Technologies Corp., Nasr said Air Canada had to take the issue into account when building its schedule to ensure fewer cancellations and flight delays.
“The engines have been a challenge,” he said. “We have been working with our partners and Pratt & Whitney to assure we have the parts that we need, the supply of spare engines so we can keep aircraft in the sky.
“There is some work still to be done by Pratt & Whitney to get the levels of reliability that we expect to see from the engine. We aren’t seeing the level of reliability at this point. We are confident they will make the improvements they need to make.”
He declined to comment directly on a Bloomberg News report last week that Air Canada is nearing a deal for as many as 20 Boeing Co. 787 Dreamliners.
According to Cirium, Air Canada has increased capacity to Japan by around 20 per cent in available seat kilometres. Nasr said that’s due to the growing popularity of the country as a holiday destination and “some factors at play with Russia and China” in a post-pandemic world that are making Tokyo a more important connection hub.