Demand for domestic air travel will rise this year as more Canadians get used to flying at cheaper prices, the CEO of low-cost carrier Flair Airlines said Thursday (Feb. 8).
“People are getting used to travelling cheaply…people are travelling more often, they’re booking later, they’re taking shorter trips. The average length of stay used to be eight or nine days, it’s now something like four days,” said Stephen Jones, speaking to media at a virtual press conference as part of a 2023-year-in-review.
As reported by Global News, Flair flew more than 4.5 million passengers last year – 1.5 million more than the year before.
“In 2022, we saw quite a lot of domestic travel as we started coming out of COVID. Last year, it really flipped and there was a lot of people going, ‘Okay, finally I’m going to go overseas again,’ so there was a lot of international travel,” Jones said.
This year, however, will once again see “strong” interest in domestic travel.
Canadians are “getting used to the fact that affordable travel can be something that they can reasonably expect in their lives, whereas previously it felt like Canadians had kind of given up on the hope of affordable travel, and that was something that other parts of the world could enjoy, but we could never enjoy it,” he said.
“I think we’ve changed that.”
Affordable fares are prompting people to travel more often, with more spontaneity, Jones noted.
Statistics Canada’s latest National Travel Survey shows that in the second quarter of 2023, Canadians took 70.2 million domestic trips, up by 5.2 million from the second quarter of 2022 and 4.7 per cent more than in the same quarter in 2019.
Domestic trips accounted for 89.6 per cent of all travel by Canadian residents in Q2, surpassing the proportion seen in the same quarter of 2019 (87.1 per cent).
Flair suspends growth plans
The insights come after Flair revealed that it would be suspending its expansion plans in 2024, for at least a year, as the airline tackles debt and aircraft delivery delays.
In an interview with the Canadian Press on Jan. 29, Jones said 2024 “will be a more muted year,” saying that the airline will return to “growth mode” in 2025.
His comments came after a Globe and Mail report revealed that Flair owes more than $67 million dollars in unpaid taxes, prompting the Canada Revenue Agency (CRA) to obtain an order for the seizure and sale of the airline’s property.
The taxes were incurred after Flair imported 18 Boeing 737 Max aircraft, beginning in 2021.
The airline said it imported the planes to meet the "post-COVID travel demand."
Flair, however, now owes the CRA $67,174,123.37 (plus penalties, interest and other fees), according to court documents obtained by The Globe.
Arrangements to pay the amount have been made, with Jones saying the situation has no impact on Flair’s operations.
The terms of the payment deal are confidential. However, Jones, characterizing the CRA as "understanding,” said it involves making monthly payments.
"We have a plan in place with them for repayment of the outstanding amount," Jones told CP. “The court-issued writ of seizure and sale was a belt-and-braces arrangement that they put in place if we were to fail on that plan — which we don't plan on doing.”
On top of this, Flair is still obligated to make payments of more than USD $7 million per month on its Boeing 737 leases and manage loans amounting to between US$200 million and USD $300 million.
The airline’s growth will also slow due to delays at Boeing, which is answering to U.S. regulators after a mid-flight blowout of a side panel on board an Alaska Airlines flight earlier this month that grounded 737 MAX 9 planes for weeks.
As of last fall, Flair’s plan was to boost its fleet to 26 Boeing 737 MAX jetliners in 2024, up from 20.
Jones said Boeing’s MAX program has faced a number of delays, telling CP earlier that planes that were supposed to arrive in spring won’t land at Flair until late fall.
“This is a tough industry," he told the outlet. "The development of the financial performance will take some time."