(Montreal) Demand for air travel could stabilize after returning to pre-pandemic levels this summer, the CEO of online travel agency FlightHub warned on Thursday.
Christopher Cave observed that airline ticket sales declined from September to October, while they typically increase before the holiday season.
“There’s a bit of anxiety around ticket prices. There is a bit of anxiety around the overall economy, interest rates, etc. We must therefore anticipate a potential slowdown in the travel market over the next 12 months,” Cave said in a telephone interview.
Sales at U.S. travel agencies fell 5 percent last month from September and 2 percent from the same month last year, according to data from Airlines Reporting, which processes tickets for the agencies.
However, Air Canada CEO Michael Rousseau said last month that demand remained “very stable,” with third-quarter ticket sales up 55 per cent year-over-year.
The travel sector has come back strong this year, with seat capacity almost equal to 2019 levels, according to aviation data firm Cirium. However, demand from business travelers remains well below pre-pandemic levels.
Analyst Helane Becker of TD Cowen says bookings are up for Thanksgiving, Christmas and New Years, but are weaker than expected for off-peak periods because travel plans adapt to tightening household budgets.
“It appears to us that we are seeing a reversion to the mean as travel patterns begin to reflect current reality,” Ms. Becker wrote in an Oct. 27 memo.
She cited rising costs in everything from rent and mortgages to food, gas and student loans.
At the same time, the flexibility enabled by teleworking or hybrid working during the COVID-19 pandemic has diminished in recent quarters.
“Four is the new three,” Becker said, referring to the number of days many workers are expected to be in the office, “and schools are returning to full-time classes. It’s no longer easy to be away for long weekends.”
For airlines, rising wages, fuel prices and interest rates are weighing on bottom lines.
“The fixed costs are there, but the revenue is not,” she stressed.