Air Canada to offset impact of higher fuel costs by raising fares
Jul 31, 2018, 3:53 pm
#31
Join Date: Apr 2016
Location: YHZ/YQM
Programs: Aeroplan
Posts: 1,618
Fares: tracking pricing on transborder flights for fall/winter. Varying in silly ways. First up a few hundred each way. I get that. Harder to understand when no seats sold in cabin (J). Over the weekend up $10/sector. Yesterday down $2. Today down $10 (on top of the $2). Trend is good.
Has anyone else noticed this? Seems like game playing. Maybe just routes I’m interested in.
Has anyone else noticed this? Seems like game playing. Maybe just routes I’m interested in.
Now that AC needs to advertise prices after all taxes and fees, a fuel/carrier surcharge only has two purposes - to extract extra money from rewards tickets (Aeroplan/Air Miles/whatever) and to make base fare coupons less costly. Increasing the surcharge on revenue tickets will either just be an overall price increase, or if there is too much competition it will be accompanied by a drop in the base fare.
Jul 31, 2018, 7:15 pm
#32
Join Date: Oct 2015
Location: Canada
Programs: Aeroplan E50/MM, HH gold, Nat Exec Elite, Kimpton Karma
Posts: 2,354
That's because fares are only loosely coupled with costs. Fares are determined by "how much can we get away with charging for this flight without driving customers away?" If there is competition on the route then they won't be able to get away with charging as much. As fuel prices rise, AC will only increase fares if they think the market can take it, and if their competition doesn't undercut them.
Now that AC needs to advertise prices after all taxes and fees, a fuel/carrier surcharge only has two purposes - to extract extra money from rewards tickets (Aeroplan/Air Miles/whatever) and to make base fare coupons less costly. Increasing the surcharge on revenue tickets will either just be an overall price increase, or if there is too much competition it will be accompanied by a drop in the base fare.
Now that AC needs to advertise prices after all taxes and fees, a fuel/carrier surcharge only has two purposes - to extract extra money from rewards tickets (Aeroplan/Air Miles/whatever) and to make base fare coupons less costly. Increasing the surcharge on revenue tickets will either just be an overall price increase, or if there is too much competition it will be accompanied by a drop in the base fare.
These amounts will make no difference to 99.9% of people booking.
Aug 1, 2018, 7:58 am
#33
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Join Date: Nov 2007
Location: YVR
Programs: Air Canada Super Elite 2+ Million Miles
Posts: 2,478
I think it was Warren Buffett who advised if you do a lot of business with a business, invest in that business.
Suppose Delta Airlines learned that lesson early.
https://www.fool.com/investing/2017/...pay-off-a.aspx
and I follow this advice too, and since +30% of airline costs are jet fuel, I’m heavily invested in those who make jet fuel.
I can say looking this morning at my holding positions, I smile when I saw this thread title which confirms my growing capital balance.
Suppose Delta Airlines learned that lesson early.
https://www.fool.com/investing/2017/...pay-off-a.aspx
and I follow this advice too, and since +30% of airline costs are jet fuel, I’m heavily invested in those who make jet fuel.
I can say looking this morning at my holding positions, I smile when I saw this thread title which confirms my growing capital balance.
Aug 1, 2018, 9:58 am
#34
Join Date: Sep 2009
Location: YYZ
Programs: AC SE MM, Bonvoy Plat, Hilton G,Nexus, Amex MR Plat,IHG Plat
Posts: 4,422
That's because fares are only loosely coupled with costs. Fares are determined by "how much can we get away with charging for this flight without driving customers away?" If there is competition on the route then they won't be able to get away with charging as much. As fuel prices rise, AC will only increase fares if they think the market can take it, and if their competition doesn't undercut them.
Now that AC needs to advertise prices after all taxes and fees, a fuel/carrier surcharge only has two purposes - to extract extra money from rewards tickets (Aeroplan/Air Miles/whatever) and to make base fare coupons less costly. Increasing the surcharge on revenue tickets will either just be an overall price increase, or if there is too much competition it will be accompanied by a drop in the base fare.
Now that AC needs to advertise prices after all taxes and fees, a fuel/carrier surcharge only has two purposes - to extract extra money from rewards tickets (Aeroplan/Air Miles/whatever) and to make base fare coupons less costly. Increasing the surcharge on revenue tickets will either just be an overall price increase, or if there is too much competition it will be accompanied by a drop in the base fare.
Aug 1, 2018, 7:05 pm
#36
Join Date: Apr 2011
Location: YYC
Programs: AC SE 1MM, Marriott Ambassador
Posts: 3,397
Maybe we should rename this thread: AC to indulge in corporate charity and not raise prices despite higher costs. Because we all know a lot of businesses that do that. Right? Oh wait a minute... Snap. No we don't. Lessee, we aren't talking about the Taxi industry right? You know that over-regulated disaster that has been trounced by Uber and Lyft in any city where they hadn't bought city council lock stock and barrel? Seriously, aside from some mildly successful humor this as to be one of the dumbest threads ever on this forum. Of course they are going to raise their prices if their costs increase. So would any other business. Maybe we should have another thread on how the sun will rise in the east and set in the west? As long as we blame AE or AC for this mind numbiing repitition (billions of years now) it will at least be on topic.
Aug 1, 2018, 8:28 pm
#37
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Join Date: Nov 2007
Location: YVR
Programs: Air Canada Super Elite 2+ Million Miles
Posts: 2,478
Price elasticity of demand remains relevant although often forgotten
in a a truly competitive market, raising prices is last resort NOT the first.
and AC can be far more efficient, we all know that.
And this Forum has plenty of room for views folks disagree with - doesn’t mean they are dumb views, but of course that is just another view that some will disagree with too.
in a a truly competitive market, raising prices is last resort NOT the first.
and AC can be far more efficient, we all know that.
And this Forum has plenty of room for views folks disagree with - doesn’t mean they are dumb views, but of course that is just another view that some will disagree with too.
Aug 1, 2018, 9:36 pm
#38
Join Date: Sep 2009
Location: YYZ
Programs: AC SE MM, Bonvoy Plat, Hilton G,Nexus, Amex MR Plat,IHG Plat
Posts: 4,422
Maybe we should rename this thread: AC to indulge in corporate charity and not raise prices despite higher costs. Because we all know a lot of businesses that do that. Right? Oh wait a minute... Snap. No we don't. Lessee, we aren't talking about the Taxi industry right? You know that over-regulated disaster that has been trounced by Uber and Lyft in any city where they hadn't bought city council lock stock and barrel? Seriously, aside from some mildly successful humor this as to be one of the dumbest threads ever on this forum. Of course they are going to raise their prices if their costs increase. So would any other business. Maybe we should have another thread on how the sun will rise in the east and set in the west? As long as we blame AE or AC for this mind numbiing repitition (billions of years now) it will at least be on topic.
Aug 1, 2018, 10:13 pm
#39
Join Date: Apr 2011
Location: YYC
Programs: AC SE 1MM, Marriott Ambassador
Posts: 3,397
Most of the discussion is not whether they will raise price. Its about what options are available and how they would execute - cut costs, raise base price, add another surcharge, etc. As @skybluesea said.
But in fact “most” of the discussion is either off topic or poor humor.
To the extent we mostly apply logic the thread topic is both self evident and a near tautology.
Aug 2, 2018, 9:20 pm
#41
Join Date: Dec 2011
Location: DTW
Programs: TK E+, WY, Radisson R
Posts: 2,360
I was looking at TPE-YYZ in Y+, booked July 31st at $1700 USD, went up to $2000 Aug 1st. This is for traveling right before Xmas.
Hint: When AC advertised sales ending July 31st, I know fares would be up, if not way up coming Aug even if your tickets aren't on sale.
Hint: When AC advertised sales ending July 31st, I know fares would be up, if not way up coming Aug even if your tickets aren't on sale.
Aug 4, 2018, 4:22 am
#42
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Airlines routinely do the math, and use the cash savings to finance replacing old airplanes with new that can quickly pay off in terms of less fuel burn, especially when coming off low base oil prices as we have just seen.
And if AC decides to charge more, well good luck to them as this just makes more room for s competitive response.
Sep 12, 2018, 12:30 pm
#43
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https://www.ctvnews.ca/business/cana...rvey-1.4090680
TORONTO - An RBC survey says airfares rose by more than 10 per cent in the first two months of the third quarter as Air Canada and WestJet passed along higher crude oil prices.
Despite slipping a bit in August, fares rose 12.5 per cent at Air Canada for July and August and were 11.3 per cent higher than a year earlier at WestJet.
The country's two largest airlines implemented fare increases in July, mostly on domestic routes.
TORONTO - An RBC survey says airfares rose by more than 10 per cent in the first two months of the third quarter as Air Canada and WestJet passed along higher crude oil prices.
Despite slipping a bit in August, fares rose 12.5 per cent at Air Canada for July and August and were 11.3 per cent higher than a year earlier at WestJet.
The country's two largest airlines implemented fare increases in July, mostly on domestic routes.