Why the drop in Canadian air travel booking to the US may be overstated

Some viral numbers did the rounds this week with data showing a forward year-over-year drop in Canadian air travel to the USA between 75% and 71% for April-September. It was even discussed on CNBC.

To illustrate: In April, the forward numbers show 295K passengers compared to 1.2 million a year ago.

Those are hard to believe given the bulk of those visits would have been booked well-before things got really bad between the US and Canada.

That said, the numbers come from respected airline flight database company OAG (who cites “a major GDS supplier”) but CIBC has questions, at least with respect to Air Canada.

“In our discussions with Air Canada, it does note it is seeing a softening in the
transborder market and has shifted some capacity, but the decline it has
experienced is not of the magnitude cited by OAG when it aggregates all
indirect and direct booking channels. AC notes the decline it is seeing in
transborder traffic is significantly less than what is being reported by
OAG.”

OAG’s own numbers also raise some questions as they show that forward seats available are only down around 3%. If demand was so bad, wouldn’t airlines be cancelling flights?

Time will tell (April data will start rolling in very shortly) but I think the truth is in the middle somewhere. For instance, Statistics Canada reports that Canadian
residents returning by vehicle from the US declined by 23% Y/Y in
February. That’s still a staggering drop but it’s not 70%.

On the other hand, if those 70% numbers are right, then the US tourism sector is in for a beating, as Canadians are the #1 visitors to the USA (by a long shot), followed by Mexicans (who also aren’t feeling the love). Tourism is a small part of the US economy overall but it’s a big part for some areas.

Update: Air Canada at its annual meeting today said that Canada-US travel bookings are down 10% in the next six months.

This article was written by Adam Button at www.forexlive.com.