Flight bookings between Canada and the U.S. are plunging amid rising trade tensions between the two allied nations.
Demand, measured by passenger bookings on flights between Canada and the U.S., has “collapsed,” falling 70% compared to the same period last year, according to a March 26 report from OAG aviation, a flight analytics company.
Visits from Canada to the U.S. account for the sharpest projected decline in travel this year, with analysts pointing to President Trump’s plan to slap tariffs on Canadian imports as causing some Canadians to hold off on traveling to the U.S.
“This sharp drop suggests that travellers are holding off on making reservations, likely due to ongoing uncertainty surrounding the broader trade dispute,” the report states.
Mr. Trump has delayed 25% tariffs on Canadian and Mexican imports until April 2, but economists say the import duties could have detrimental effects on their economies given their deep reliance on the U.S. The drop in airline demand reflects “a degradation of travel demand between the two countries, especially coming from the Canadian side,” Scott Keyes, founder of Going.com, a flight deals website, told CBS MoneyWatch.
As Mr. Trump promotes an “America First” trade policy, Canadians are similarly focusing on spending their dollars domestically, following former Canadian Prime Minister Justin Trudeau’s please last month for residents to “choose Canada,” former Canadian Member of Parliament Dr. Ruby Dhalla told CBS MoneyWatch.
“Instead of traveling to the U.S., we are seeing families travel visiting cities, towns and villages and exploring Canada’s history and heritage,” Dhalla said.
Capacity cuts
Airlines are responding by cutting seat capacity to Canada’s southern neighbor for the summer months and through October, according to the aviation analytics provider.
The most significant airline capacity cuts are scheduled for July and August, during the peak travel summer period. Airlines cut more than 320,000 seats worth of flight capacity from March through October between the two countries, according to the OAG report.
Weaker-than-usual demand could lead to deals on airfare for passengers who still plan to travel from Canada to the U.S., OAG said.
“For those that are still planning to travel there may be some airlines offering particularly cheap airfares over the next few months as they seek to stimulate demand but for the airlines it will be a nervous few months, especially as the traditional ‘snowbird’ market from Canada to the U.S. could be badly impacted next year if the situation doesn’t improve quickly,” the report states.
Slashing routes to the U.S.
Canadian airlines are expected to be hit harder than their American counterparts because the nation’s residents are driving the downward trend, experts say. Americans typically prefer to fly American airlines because they might have loyalty accounts with a carrier, for example.
Flair Airlines, a budget airline based in Canada, said last week it is cutting flights from Toronto to Nashville, as well as from Calgary to Las Vegas and Edmonton to Las Vegas.
“These are thee types of routes they are not confident in being able to sell at a rate that would make it profitable, so they are re-allocating some of the lax capacity elsewhere,” Keyes said.
Air Canada also said in its fourth quarter earnings call that beginning in March, it will reduce capacity to some U.S. leisure destinations, citing shifting demand.
Megan Cerullo is a New York-based reporter for CBS MoneyWatch covering small business, workplace, health care, consumer spending and personal finance topics. She regularly appears on CBS News 24/7 to discuss her reporting.
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