MONTREAL - Demand for air travel may be levelling off after soaring to pre-pandemic levels over the summer, says FlightHub's CEO.
Christopher Cave said airline ticket sales dropped from September to October, when they typically rise ahead of the holiday season.
“There is a bit of anxiety around ticket prices. There is a bit of anxiety around the overall economy, interest rates and so on. So we have to anticipate the potential softening of the travel market over the next 12 months,” Cave said in a phone interview.
Sales at U.S. travel agencies last month fell five per cent below levels from September and two per cent from a year earlier, according to data from Airlines Reporting Corp., which processes tickets for agencies.
However, Air Canada CEO Michael Rousseau said last month that demand remains “very stable,” with advance ticket sales in its third quarter up 55 per cent year-over-year.
The travel sector came roaring back this year, with seat capacity nearly on par with 2019 levels, according to aviation data firm Cirium. Though demand from business travellers remains well below that of pre-pandemic days.
TD Cowen analyst Helane Becker said bookings are up for Thanksgiving, Christmas and New Year's but worse than expected for off-peak periods as travel plans adapt to strained purse strings.
“It appears to us that we are seeing a reversion to the mean as travel patterns start to reflect the current reality,” Becker said in an Oct. 27 note.
She cited increased costs on everything from rent and mortgages to food, gas and student loans.
Meanwhile, the flexibility allowed by at-home or hybrid work during the COVID-19 pandemic and its immediate aftermath has decreased in recent quarters.
“Four is the new three,” Becker said, referring to the number of days many workers are expected in the office, “and schools are back in session full time. It is not easy to get away for long weekends anymore.”
For airlines, higher wages, fuel prices and interest rates are weighing on the bottom line.
“The fixed costs are there, but the revenue is not,” she said.
This report by The Canadian Press was first published Nov. 16, 2023.
