‘Book It Now’: Vacation Travel Costs Set To Soar Due To Increased Demand And Rising Fuel Costs – Waterloo Region Record

Attention international travellers. The cost of your long-awaited vacation is set to soar. Travel experts say the best bet is to book it now.

Just as COVID induced travel restrictions are lifting, the price of fuel is skyrocketing, and that means Canadians clamouring to getaway are going to feel the brunt of increasing travel costs.

“There was unbelievable interest in March break travel,” said Martin Firestone, president of the travel insurance brokerage Travel Secure Inc. That increased demand, coupled with oil sanctions against Russia, will increase the cost of air travel, said Firestone.

Travel search website Kayak compared the price of international flights in March 2022 to March 2019. It found the average costs rose drastically for some popular destinations.

For example, a flight from Toronto to New Delhi is up 60 per cent over 2019 prices. The average price of flights from Toronto to destination hot spots Cancun and Dominican Republic has increased 47 per cent. Even the short trip to New York is 30 per cent more than three years ago. A trip to Paris is 15 per cent higher.

Oil and gas sanctions levied against Russia for its invasion of Ukraine have already pushed up the price of fuel by more than 27 per cent. Oil rose to $142 (U.S.) a barrel in the week ending March 4, according to S&P Global Commodity Insights.

And that, combined with the federal government dropping its recommendation that Canadians avoid international travel for non-essential purposes, allowing antigen tests instead PCR tests when entering the country, and ending quarantine for kids 12 and under, makes it worthwhile to book now, Firestone said.

“Anyone who was sitting on the fence about travel aren’t now,” he said. “It basically reignited the travel industry.”

The question consumers should be asking is whether a surcharge will be added at a later date to a trip already paid for to compensate for the rising oil prices, said Firestone.

“That would be my biggest question,” he said. “Could there be additional costs tagged on?”

When it comes to cruise ship tickets, Firestone warned prices are likely to increase drastically.

Deise da Silva at Toronto’s Mandala Travel agency has watched prices increase substantially since travel restrictions eased in February.

“Prices have gone up at least 20 per cent to the Caribbean,” said the travel agent. For example an all-inclusive vacation to Cuba was $800 at the beginning of the year. This week it cost closer to $1,200.

Da Silva expects prices to rise even higher along with soaring fuel prices, as some airlines carry exorbitant fuel surcharges — an extra charge on top of airfare — to cover the cost of airline fuel.

Air Canada always factors fuel costs into ticket prices, said spokesperson Peter Fitzpatrick.

“A number of factors go into airline ticket pricing apart from fuel and fixed costs, including but not limited to, competition, demand, third-party navigation, airport and other charges, marketing considerations and the type of traffic that a route serves,” Fitzpatrick said in a statement. “To compensate for some of these, we do include a carrier surcharge as a regular part of our normal pricing, but not a specific ‘fuel surcharge,’” he said.

WestJet spokesperson Denise Kenny, said fares have not been increased and said that demand is the key driver of ticket prices.

In a conference call last week, Transat A.T.’s chief financial officer Patrick Bui said the tour operator may consider fuel hedging (agreeing to purchase oil in the future at a predetermined price) to buffer against mounting costs.

Helane Becker, an analyst with investment banker Cowen Inc., said airports generally have about two weeks’ worth of jet fuel on hand, which means airlines are only now starting to feel the financial pressure.

“Unsurprisingly, jet fuel at the current level or higher is a significant headwind to airline earnings. That said, it would not be surprising to see a repeat of 2008 when a rapid rise in fuel prices was followed by an equally rapid fall,” she wrote in a research note.

Allison Wallace, director of media and communications for Flight Centre Canada, said with the easing of restrictions there is no question that there is a lot of pent-up demand, which is driving costs for the short-term.

“Historically, when fuel prices have gone up it takes a bit of time for that cost to be passed on to the customer in terms of higher prices as airlines purchase fuel on futures,” she said.

If people are weighing whether to book tickets now or wait for costs to decrease, it’s best to book now and lock in the current price, said Firestone.

“Do it whether they add a surcharge or not, because in three or four months I can’t imagine what some of these costs will be.”

With files from The Canadian Press.