Airlines adding seats to U.S. despite falling Canadian dollar

Airlines adding seats to U.S. despite falling Canadian dollar

TORONTO — The number of Canadians visiting popular U.S. destinations by air increased last year and several carriers are adding more seats to those same destinations this year, according to the Conference Board of Canada.

Jennifer Hendry, Senior Research Association, Canadian Tourism Research Institute, The Conference Board of Canada.

Jennifer Hendry

At the annual general meeting of Discover America (Canada) in Toronto yesterday, Jennifer Hendry, Senior Research Associate of the board’s Canadian Tourism Research Institute also told members the weaker Canadian dollar will result in leisure trips to the U.S. growing at slower pace – an average annual rate of only 2.2% between 2014 and 2018, a drop from 6.1% between 2000 and 2013.

As for 2014, Hendry said direct arrivals to Florida grew by 5.9% (to reach 1.73 million) with more than 80% of these passengers deplaning in Orlando, Miami or Fort Lauderdale. Direct arrivals from Canada to Las Vegas grew by 13.4%; Phoenix rose by 5.9%; and Hawaii increased by 1.3%.

This year, meanwhile, carriers plan to increase seat capacity, with 59,000 more seats to Hawaii (thanks to Air Canada and WestJet); 180,000 more to Florida; 47,000 more to Las Vegas; 67,000 more to Los Angeles; and 37,000 more seats to Phoenix. Arrivals to New Orleans are also expected to grow this year due to increased capacity by Air Canada out of Toronto.

Other findings:

  • Short term trip volumes won’t be as strong as in the past few years
  • The falling loonie could affect summer travel to the U.S. in 2015 and winter 2015/16
  • U.S. markets frequented by snowbirds shouldn’t be impacted as this demographic is fairly resilient to slight fluctuations in the dollar
  • Same-day auto travel may decrease especially for shopping excursions though activity-based trips are expected to remain steady
  • Though jet fuel dropped significantly in the second half of 2014, the consensus is that airlines will not fully pass on these savings to customers
  • Modest growth in Canadian outbound leisure travel is predicted over the next five years. The Conference Board forecasts the Canadian dollar will trade around US85 cents between now and 2018, though disposable income is forecast to grow at an average annual rate of 2.4% through 2018 which is sufficient to grow outbound leisure travel
  • Canada’s aging population will contribute to leisure travel growth. Canadians aged 65-plus are almost three times more likely to travel to the U.S. for pleasure as they are to other destinations.

When asked about their dream destination, Canadians who made at least one overnight leisure trip in the last three years, ranked Hawaii second overall behind Australia.