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Fasten your seatbelts, fares are ready for takeoff Add to ...

Glen Legere kicks himself for ignoring the cheap airfare he saw last month. Now, the price for the Mexico flight he is after shoots up each time he checks Air Canada's website.

In May, the Montreal man used Aeroplan points to book reward seats for his wife and two small children on a flight to Cancun for March Break, 2010. He plans to pay cash for his own seat, and wants to be on the same plane as his family.

On May 22, when the fare was $697, he opted to wait, hoping that it would go down. By May 27, it had risen to $899. Still, he waited. On June 12, it was $1,119.

"My gut feeling is it will come down," he says. But if that doesn't happen by September, he will give in and book, no matter what it costs him.

Legere's "gut feeling" that prices will drop is not shared by many fare experts. Travellers have been spoiled in recent months with mind-boggling bargains as cash-strapped carriers struggled in a faltering economy. Now, those deals could quickly disappear, says Brian Simpson, general manager of online travel agency Travelocity.ca.

"The deals are still out there," he says. "If you find them, lock them in." Recently, he took his own advice, snagging "a fantastic airfare to Ireland" for a personal trip in late August.

Simpson points to a number of trends to back up his case that fares will soon soar. Fuel prices are on the rise again, he says. The supply of seats will drop as airlines park even more planes in the desert. And as consumer confidence rises, there will be more demand for fewer places.

Airfares for flights within Canada are already on the rise, says Joel Grus, a fare analyst with Bing, a new Microsoft search engine. The Bing system analyzes airfares on a daily basis in order to monitor trends and make predictions.

"For trips within Canada, it seems like the days of cheap airfares ended a little while ago," Grus says. He points to average fares of $351 in April, which rose to $482 by June.

From Canada to the U.S., fares are still very low, but they aren't likely to go much lower, he says. "If you really want to go on a trip, the odds are that it will get more expensive rather than cheaper."

As for package tours to sun destinations, the best bargains will go to those who book early, says Lawrence Elliott, vice-president of Sunwing Vacations. Last year's bonanza of low prices will continue this winter because resort destinations have an oversupply of new hotels combined with reduced international demand, he says. But Canadian operators learned this past winter that filling seats with last-minute selloffs is a risky business, he says.

As a result, most operators are emphasizing early-booking bargains and bonuses to quickly sell a designated part of their inventory. "Once we reach that level, we can't continue to sell at net cost or under cost price," he says. Bargain dates will vary with operator and destination, but as a rule of thumb, expect the best prices for bookings before Aug. 31. Prices could rise again at the end of October and the end of November, he says.

Brian Simpson's prediction that fuel prices will go up should come as no surprise to anyone who has visited a gas pump recently. While the cost of crude oil dipped slightly in mid-June, it had risen by more than 100 per cent in the previous three months.

Simpson's view that airlines will continue to make fewer seats available is also reflected in daily news reports. Air Canada recently said it will shrink capacity by 4 to 5 per cent this year, up from an earlier estimate of 2.5 to 3.5 per cent. Meanwhile cuts of 10 and 7.5 per cent were announced by Delta Air Lines and American Airlines respectively, while Irish carrier Aer Lingus will cut its long-haul seat offerings by a quarter for the winter.

The planned cuts come as the International Air Transport Association predicts that the world's airlines will lose $10.2-billion this year. All carriers must take steps to "better match capacity to falling demand," IATA chief executive officer Giovanni Bisignani told airline presidents at the association's annual general meeting this month in Kuala Lumpur.

"Cuts in capacity mean airlines have fewer seats to unload at low rates," Simpson says.

As for increased demand - which could also force up prices - he points to internal research by Travelocity.ca. A recent online poll indicated that 21 per cent of nearly 1,000 Canadians surveyed planned to travel more this year than last year. Only 10 per cent gave that answer the year before.

As always, of course, there are dissenting voices. Sean Shannon, managing director of online agency Expedia Canada, says he expects most airfares to drop as travel dates get closer. "The one thing that fluctuates is the demand side," he says. "If the [economic]news continues to be more bad stories, that will drive the demand side down, which drives down prices."

Expedia Canada's internal data, however, show that fares have been rising. The average airfare already sold for flights starting in Canada for the upcoming October-to-March period is $11 higher than for the same period one year ago, he says.

Rick Seaney, CEO of FareCompare.com, says fares will rise once airlines start cutting capacity. Still, the deals to international destinations could continue through the fall and winter as airlines compensate for a drop in business traffic, he says. "But if oil goes from $70 to $90 a barrel, all bets are off."

For flights within North America, sale prices have been drying up since the end of May, Seaney says. "Over all," he says, "I believe it's a good time to lock in to airfares."


Decisions, decisions

Unsure whether to book now or wait? These websites may help you decide:

Bing Travel This is part of Microsoft's decision engine launched this month. Enter a North American route and the date you want to travel and the site will give a "buy now" or "wait" recommendation. It will also give the amount the fare is expected to increase or decrease over the next seven days. (bing.com/travel)

Airfarewatchdog.com By signing up on the site, it is possible to receive e-mail alerts (as frequently as once a day if you want) giving the latest airfare deals on a route or routes of your choosing. (airfarewatchdog.com)

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