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Air Canada may reduce flights to certain U.S. destinations, and add more to its domestic routes and the so-called “sun market” — Mexico, the Caribbean, etc. — if demand from travellers begins to lag, the airline told investors on Friday.
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The continued threat of tariffs — and perhaps annexation — from U.S. President Donald Trump has Canadians rethinking their travel plans, as does a weak Canadian dollar, which sits at 71 cents U.S. today, but dipped below 68 cents early in February, its lowest level in more than two decades.
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“We are anticipating proactively that there could be a slowdown,” in the U.S. market, said Air Canada’s executive vice-president of revenue and network planning, Mark Galardo, on a conference call to discuss the airline’s fourth-quarter earnings.
“We don’t see it right now in our near-term bookings to the U.S.,” he continued. “We don’t see any major slowdown or anything substantial that would change our view of the market. That being said, if we could de-risk this a little bit and be a bit proactive and move capacity into other sectors we see strength in, I think that’s the right move right now in this context.”
He said that the second and third quarters of this year presented opportunities on this front.
“As we go into later Q2 and early Q3, the supply-demand balance seems to be a bit more optimal and we think there is an opportunity in some Canadian leisure markets to move a little bit of capacity,” Galardo said. “And as well the sun market looks very strong all the way through the booking curve, and there could be an opportunity as well for us to move a little bit of capacity there.”
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He added: “These are tweaks to our central offset of the U.S. leisure situation.”
Air Canada’s chief executive Michael Rousseau said the airline will “continue to navigate uncertainty and external pressures with prudence and decisiveness,” noting Air Canada is prepared to “adapt promptly to any changes or challenges that may arise.”
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Head of communications for Flight Centre Travel Group Amra Durakovic told the National Post this week that the number of Canadians going to the U.S. was on the decline. She said experts at Flight Centre have already helped Canadians change U.S. travel plans and rebook elsewhere, including “bucket-list and milestone experiences valued at $20,000 and more.”
Meanwhile, a survey about corporate travellers by market research group YouGov found that 85 per cent of Canadian small and mid-size enterprises said that “U.S. tariffs or trade restrictions would decrease their businesses’ cross-border corporate travel for trade business activities.”
Two months ago, Air Canada released its newest holiday advertisement, “The Pond.” Though it did not comment on specific travel destinations, its themes of hockey and winter, plus an imagined flight to the North Pole, had a distinctly domestic vibe.
With files from The Canadian Press
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