Airlines blame demand for decision not to drop plane ticket prices as fuel costs fall

Air Canada says fuel shortages are not affecting their operations, saying there will be ‘no significant impact’ through this summer. Kamil Karamali explains.

MONTREAL — Canadians continue to hop on board airplanes this summer even as ticket prices remain well above where they were last year — despite a recent drop in fuel costs.

As of late June, domestic economy airfares remained 11 per cent higher than a year earlier, while international fares were roughly comparable year-over-year, according to travel search platform Kayak.

Nonetheless, major North American airlines have said demand going into the peak travel season was proving resilient in spite of greater global conflict and Canadians’ shunning of the U.S.

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“We’ve been in the green for the better part of the last two months. Despite multiple increases in fares, we have not seen demand (fall),” Mark Galardo, Air Canada’s chief commercial officer, told analysts on April 30 in reference to summer flights.

Acceptance of higher ticket prices means those fares likely won’t come down until early autumn, said John Gradek, who teaches aviation management at McGill University.

“Domestically, it’s gangbusters,” he said. “We’ve got a very strong will on the part of the carriers not to put Canada on sale this summer, because demand is still strong even at those higher rates.”

Some 2.5 million passengers boarded domestic flights in May, a 6.4 per cent jump from May 2025, according to Statistics Canada. Air travel to the U.S. nudged downward 2.1 per cent — the 16th consecutive month of year-over-year drops — while transborder car traffic rose.

Much of Canadians’ renewed interest in their own country continues a turn away from U.S. travel that began last year, a shift prompted by the tariff war set off by U.S. President Donald Trump and his 51st-state rhetoric.

“Politics is big,” said Wayne Smith, director of the Institute for Hospitality and Tourism Research at Toronto Metropolitan University. But Canadians’ aversion to America and enthusiasm for in-country trips goes beyond presidential proclamations.

“I call it misalignment of values,” Smith said. “If you’re LGBTQ+, if you’re a minority ... there’s concerns about how you’re going to get treated.”

Fears abound about a more aggressive U.S. Immigration and Customs Enforcement agency, he said. Hence travellers’ move toward Canadian destinations.

Some residents have been making sacrifices elsewhere in order to afford travel. About 42 per cent of Canadian respondents to a survey from cashback rewards company Rakuten said they were cutting back spending in other areas even as they shell out on pricier plane trips.

“Despite rising costs and volatility shaping how people spend, many are making intentional trade-offs elsewhere to protect travel, reflecting a growing desire to reconnect and recharge,” said Rakuten general manager Jennifer LaForge in a news release.

As long as demand holds steady airlines have little incentive to lower their fares, regardless of the fact that fuel prices are coming back down to earth, said Barry Choi, who runs the Money We Have personal finance and travel website.

“I hate to say it, but once prices go up airlines tend to not bring them back down,” he said.

A one-way flight Choi hopes to take to Toronto from Los Cabos, Mexico, in December is already priced at about $700, he said. “I’ve flown to Europe round-trip for cheaper than that.

“There’s no reason why that flight should be as expensive as it is right now,” he continued. “But they’ve got the algorithms, they’ve got the numbers. They know exactly what people are going to pay and what people are going to buy it.”

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International flights from Canada actually cost between two and three per cent less in June after soaring above 2025 levels through much of April and May. Experts attributed June’s nearly flat year-over-year fares partly to the fact that they rose so high last year on explosive demand amid a partial boycott on U.S. travel.

As of last Friday, the per-barrel price of jet fuel sat 24 per cent below levels from a month earlier, but 30 per cent higher than in late June of last year, according to the International Air Transport Association.

Some Canadian airlines have scaled back fuel surcharges as energy prices fall, but others have stayed the course.

WestJet has reduced its levy on companion voucher bookings to $40 from $60. Porter Airlines has cut the fuel surcharge for new reward flight bookings by half to $20.

However, those reductions affect a relatively small slice of passengers.

“When you look into the details of those jet fuel surcharges, sometimes it’s for reward flights only or for the companion fare only. So it actually doesn’t affect the general public that much,” Choi said.

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Christopher Reynolds, The Canadian Press

This report by The Canadian Press was first published July 3, 2026.