TRANSPORTATION REPORTER
The global airline industry, traditionally slow to benefit from an economic revival, is finding that it's once again able to raise fares without scaring away passengers.
Average economy-class fares have climbed 10 per cent since the lows of mid-2009, even as carriers gradually expand their capacity and still manage to reduce the number of empty seats, the International Air Transport Association (IATA) said yesterday.
International passenger traffic has jumped 8.6 per cent over the past year, while the airlines' load factor, or the proportion of seats filled by paying customers, rose to an average of 75.9 per cent in January, compared with 72.2 per cent in the same month last year.
While February statistics are still being compiled for the global airline industry, WestJet Airlines Ltd. said yesterday that its traffic increased 9 per cent last month, compared with February of 2009.
Global carrier Air Canada, which saw its February traffic rise 5.5 per cent year-over-year, is a member of IATA, but WestJet is not.
Calgary-based WestJet, which flies within North America and to Hawaii and the Caribbean, had a load factor of 80.6 per cent in the first two months of this year, up from 79.6 per cent in the same period last year. Air Canada's load factor for January and February averaged 77.9 per cent, down from 78.8 per cent a year earlier.
The share prices of several major foreign carriers have surged in recent months, with investors betting that oil prices will be stable this year and planes will fly fuller than in 2009.
"The Canadian carriers, and in particular WestJet, haven't participated in terms of share price improvement to the degree that the U.S. airlines have rallied," said National Bank Financial Inc. analyst David Newman.
Bargain-basement fares within Canada are increasingly hard to book, with National Bank Financial's index of the lowest available ticket prices in selected domestic markets up roughly 20 per cent over the past year. The sampling goes into a rolling six-week average that shows general trends.
IATA cautioned that economy-class airfares globally are still 9 per cent below those in early 2008, while premium ticket prices remain 20 per cent lower than two years ago.
Despite some positive signs, IATA members are expected to lose $5.6-billion (U.S.) this year, said IATA director general Giovanni Bisignani. The global industry lost an estimated $11-billion in 2009, when leisure passengers and corporate travellers either cancelled or scaled back flights during the recession.
WestJet posted a $98.2-million (Canadian) profit in 2009, while Montreal-based Air Canada lost $24-million. Trade publication Airline Weekly noted that IATA's loss forecast excludes WestJet and other non-IATA members, many of which are among the most profitable in the world.
Although WestJet stumbled in introducing a new computer reservations system, the carrier has turned the page and is now preparing to unveil its much-delayed frequent-flier program and loyalty credit card, Mr. Newman said.
WestJet has a single-class cabin, but Air Canada's continuing reliance on luring executives into business class is casting a cloud over its financial recovery, analysts say.
WESTJET (WJA)
Close: $13.97, down 15¢
AIR CANADA (AC.B)
Close: $1.53, up 3¢
Brent Jang