Airlines blame demand for decision not to drop plane ticket prices as fuel costs fall

An Air Canada plane takes off from Montreal's Trudeau airport on Friday, Sept. 13, 2024. THE CANADIAN PRESS/Christinne Muschi

MONTREAL — Canadians continue to hop on board airplanes this summer even as ticket prices remain well above last year’s levels — despite a recent drop in fuel costs.

As of late June, domestic economy airfares remained 11 per cent higher than a year earlier, while international fares were roughly comparable year-over-year, according to travel search platform Kayak.

Nonetheless, major North American airlines have said demand going into the peak travel season has proven resilient despite greater global conflict and Canadians’ turn away from U.S. travel.

“We’ve been in the green for the better part of the last two months. Despite multiple increases in fares, we have not seen demand (fall),” Mark Galardo, Air Canada’s chief commercial officer, told analysts on April 30 in reference to summer flights.

In May, travel volumes in North America held up even as the energy and transport shocks of the Iran war were shaking the global economy, according to the International Air Transport Association.

“Demand still appeared to be largely resilient in the face of high fuel prices and airfares,” said association director Willie Walsh in a news release Tuesday.

The trend holds true in Canada in particular, with some residents making sacrifices elsewhere in order to afford travel. Some 42 per cent of Canadian respondents to a survey from cashback rewards company Rakuten said they were cutting back spending in other areas even as they shell out on pricier plane trips.

“Despite rising costs and volatility shaping how people spend, many are making intentional trade-offs elsewhere to protect travel, reflecting a growing desire to reconnect and recharge,” said Rakuten general manager Jennifer LaForge in a news release.

As long as demand holds steady, airlines have little incentive to lower their fares, in spite of the fact that fuel prices are coming back down to earth, said Barry Choi, who runs the Money We Have personal finance and travel website.

“I hate to say it, but once prices go up airlines tend to not bring them back down,” he said.

A one-way flight he hopes to take to Toronto from Los Cabos, Mexico, in December is already priced at about $700, said Choi. “I’ve flown to Europe round-trip for cheaper than that.

“There’s no reason why that flight should be as expensive as it is right now,” he said. “But they’ve got the algorithms, they’ve got the numbers. They know exactly what people are going to pay and what people are going to buy it.”

As of last Friday, the per-barrel price of jet fuel sat 24 per cent below levels from a month earlier, but 30 per cent higher than in late June of last year, according to the International Air Transport Association.

This report by The Canadian Press was first published July 3, 2026.

Christopher Reynolds, The Canadian Press