After two years of lockdown and travel restrictions, many Canadians are eager to pack their bags and finally hit the road.
However, there is a catch. As travelers no longer need to worry about a COVID-19 test to get home, they face a new hurdle: rising travel costs fueled by increased demand and sky-high oil prices.
“Even though the travel restrictions have been removed, a new restriction has been added, which is a financial restriction,” said Chanakya Ramdev, a prospective traveler from Waterloo, Ont.
Ramdev has not seen his parents, who live in India, since 2018. In April, after Canada lifted most of its travel restrictions, he started looking for flights, leaving in July. However, he was put off by the price: around $2,000 for a round trip to India.
Ramdev had hoped prices would come down, but when he rechecked in May, he said he was dismayed to find airfares to India had soared to around $3,000, a price he couldn’t. afford.
“Three thousand dollars to me is like five months’ rent,” said the 30-year-old entrepreneur, who has put his travel plans on hold.
“It was very disappointing because my parents, who are now elderly, have been alone in India.”
It seems that those cheap offers offered by airlines at the height of the pandemic have disappeared.
According to Statistics Canadaairfares increase by more than 20% in April 2022 compared to April 2019 before the pandemic.
Over a three-month period, from February to April this year, air fares jumped 13%.
Economist Hayley Berg attributes the increases to higher demand and soaring oil prices.
According to the US Energy Information Administrationthe US Gulf Coast jet fuel price in April was six times higher than the same month in 2020.
“We have travelers who are eager to get out…but fewer seats [are] available that we would typically see at this time of year. Combine that with airline costs that have increased significantly due to increased jet fuel prices, we’re going to have fewer seats that are more expensive,” Berg said with Montreal-based travel app Hopper.
At present, flights to India can be particularly expensive for airlines to operate, as they must take a longer route North America due to the closure of Russian airspace.
You are no longer on the road?
Road trips are usually a cheaper option than flying, but not so much these days.
Gasoline prices have been climbing since December. This week, the average price of gasoline in Canada exceeded $2 per litre, a record high.
So it’s perhaps unsurprising that, according to a new poll, two-thirds of Canadian drivers surveyed said soaring gas prices are likely to force them to cancel or limit their trips this summer.
The poll, conducted by Leger for the Tire and Rubber Association of Canada, surveyed 1,538 Canadians in April. The poll had a comparable margin of error of +/- 2.5%, 19 times out of 20.
Before the pandemic hit, Ted Hilton of Ingersoll, Ont., made the 460-kilometre journey to his cousin’s home in Michigan several times a year.
Even though he no longer has to worry about COVID-19 testing requirements when crossing the border, Hilton said he can’t afford to resume sightseeing until gas prices go up. had not dropped.
He also plans to make fewer trips to visit family in Ontario.
“It’s a little discouraging,” said Hilton, 81, who lives on a fixed income. “You depend on staying in touch with friends and family…and not being able to travel and meet them makes you feel pretty isolated.”
Where are the prices going?
Fuel prices are rising due to limited supply at a time when demand is rising, said Laura Lau, chief investment officer at Brompton Funds, which closely follows the energy market.
“As the economy reopens, people are going back to work, they’re flying more to travel,” she said. “[The] demand is basically at pre-COVID levels.”
Meanwhile, Lau said, supply remains constrained due to embargoes on Russian oil imports and declining investment in new drilling projects.
“There is definitely a drive for companies to use less carbon and the trend to use electric vehicles,” she said. “So what we’ve seen is that oil and gas production has almost been pariah.”
Oil analyst Dan McTeague predicts that due to increased demand, fuel prices will rise this summer and gasoline prices will rise another 10%.
“In Toronto, there are days this summer when gasoline will hit $2.20 a litre. Vancouver could see $2.45,” said McTeague, president of Canadians for Affordable Energy.
If his predictions come true, it could be another summer where a number of Canadians choose to stay close to home – not out of fear of COVID-19, but rather out of fear of a costly travel bill.