We are seeing a slow air travel recovery in the United States, so how is our Northerly neighbor doing?
The left chart illustrates how Canadian airline fuel consumption saw steady improvements on a per flight hour basis from 1985. From about 2000, the fuel consumption per passenger also saw a sharp improvement. But in 2020 we see a reversal in fuel burn per passenger as load factors declined.
The right-hand chart clearly shows the waterfall traffic dropoff in 2020. The load factor is down by 34%. Which is probably not as bad as one might have expected. Reduced schedules clearly help to ameliorate that. August 2019 compared to August 2020, traffic declined by nearly 87%. After years of steady traffic growth, this has been as much of a shock to Canada’s airlines as in every other market.
If there’s a silver lining in the market, the pandemic has made Air Canada’s decision to buy Air Transat an even better idea. Like all deals made before the pandemic, re-pricing is in order. However, air travel will recover even if it takes two more years. By then Air Canada will have access to a very useful fleet of A321LRs, 15 of which are on order. This aircraft will prove to be highly effective as international markets reopen. It has a Trans-Atlantic range and a smaller capacity, with associated lower costs than a widebody. Air Canada could be in a good position to exploit re-opening markets between North America and Europe.