No-frills carrier CanJet Airlines is slashing fares on many of its popular routes -- a temporary move unlikely to spark fierce seat sales from bigger rivals, industry observers said Thursday.
Usually when one carrier launches a seat sale, the competition might match it depending on the length of the sale. If it's a short one like Westjet's overnight sales every now and then the competition generally won't but if its a week-long sale the competition probably will. When you "slash fares" you generally reduce the price of fares and the other carriers are forced to match them to remain competitive.
"We find there's generally a lull in traffic just before you get into the Spring season," said Wayne Morrison, a spokesman for Halifax-based CanJet. "It's about stimulating traffic during a traditionally slow period."
March has Spring Break, April has Easter weekend, and May has the long weekend (forget what it's called). Q2 is also traditionally the second most profitable quarter of the year. I have no idea how long the "slashed fares" are to last for but as long as it isn't into the summer... have at 'er.
Airline tickets have steadily climbed in Canada since the collapse of Montreal-based Jetsgo, forced to shut down and put itself in court protection after offering customers $1 one-way fares.
When Jetsgo was flying you could purchase one-way tickets YVR-YEG for as low as $49 and YVR-YYZ tickets for as low as $99. Those prices are now around $79 and $199 respectively. Anybody who thinks those prices are high needs to give their head a shake.
WestJet and Air Canada _ no longer required to match Jetsgo's heavily discounted fares -- are on more stable financial footing and thus able to charge higher prices and offer fewer perks to offset the skyrocketing cost of fuel.
Actually offering fewer perks is being driven by the thirst for the lowest possible fare. Fuel is obviously a problem but its hardly the issue it was during the last hurricane season when the crack spread had jet fuel at $120 bbl. With the price of oil staying pretty constant at ~$60 bbl the airlines should be able to better price their tickets.
CanJet's seat sale is strictly temporary, he noted. "Do I think we can expect to see fare wars? Absolutely not.
Agreed. I don't see a fare war whatsoever.
"CanJet is not a sign of things to come. They are definitely going to raise prices back up in the summer season, which is when most airlines make their money."
I hope so. This summer is shaping up to be an extremely profitable summer for all involved, I hope.
There is simply too much demand in the market to sustain a lower fare structure, said Karl Moore, a professor at McGill University's faculty of management in Montreal.
"There are not enough competitors out there. The supply is bumped up a bit thanks to Air Canada, Jazz and WestJet, but it's nowhere near what it was when Jetsgo was around," he said.
Bullshit. There is enough domestic competition as it is.
I'm guessing that most of Canjet's customers that fly to YVR and YYC are Maritimers supporting the local airline. I doubt you'll see much Westerners supporting an airline they have probably never heard about.
