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turism&travel : Slow recovery for Canadian airline industry

Tuesday 14 September 2010

VANCOUVER - Canada's airline industry is recovering slowly in 2010 from last year's plunge in demand, but cost-conscious travelers are making it hard for the sector to raise prices and recuperate fully, according to a report released Monday.

The sector, dominated by Air Canada and WestJetAirlines Ltd, is expected to post a pre-tax profit ofC$192 million ($186 million) this year, the Conference Board of Canada said.

That is a sharp turnaround from a pre-tax loss of C$380million last year, the industry's first loss in five years, as the economic recession gutted travel demand worldwide.

"Passenger counts are up and airlines are enjoying a much-improved 2010, but the industry is still several years away from approaching its pre-recession profit levels," Conference Board economist Maxim Armstrong said in astatement.

"Air travelers are willing to fly, but only if the price is right, so airlines have limited ability to increase fares even when costs such as fuel are on the rise," he said.

Canadian industry profits are expected to reach about C$360 million in 2011, rising to C$500 million by 2014, the independent research organization said.

"Airlines will have to wait until next year -- when the economy will be on more solid ground, and consumers and businesses are more confident in their financial situation -to boost their prices," Armstrong said.

Shares in No. 1 carrier Air Canada, which a year ago teetered on the verge of bankruptcy but is now on a stronger footing, are up nearly 90 percent so far this year.

Stock of low-cost rival WestJet, which was one of the few North American airlines to remain profitable through the recession, is largely unchanged since the start of the year.

Source: Reuters
Autor: eTurboNews