Canadian flights are now ‘dirt-cheap’ — with prices as low as $114 to fly between Toronto and Vancouver

Canadian airlines are offering domestic flights at rock-bottom prices for the summer and fall in an effort to stir up demand while they wait for travel restrictions to loosen.

As of mid-afternoon June 2, one-way flights on WestJet and Air Canada between Toronto and Vancouver and between Calgary and Ottawa were as low as $114 from mid-June to December.

Heading from Ottawa to Vancouver this August? $132. Calgary to Toronto later this June? $112.

They're trying to restart the engine," said Frederic Dimanche, director of the Ted Rogers School of Hospitality and Tourism at Ryerson University.

Dimanche said the low prices are a strategy by the airlines to try and increase consumer demand, which is intrinsically tied to pricing in the airline industry.

You lower the price, you are likely to increase demand," said Dimanche. That's what we call price elasticity. And that's a phenomenon that they will be working on right now because demand is as low as it's ever been."

Other sweet deals include Air Canada's one-way airfare between Toronto and New York later this summer for less than $200, and similar prices for trips between Montreal and Vancouver. Both airlines have one-way flights from Vancouver to Seattle for less than $200 this summer.

Kevin Bryan, an associate professor of strategic management at the Rotman School of Management at University of Toronto, said Canadian domestic flights have historically been fairly expensive because of the lack of competition, but prices have always been subject to demand.

As an industry with high fixed costs, if demand for flights is low, airlines will drop prices to try and fill seats, even if they don't make as much of a profit on them, said Bryan.

After all, the flight will go ahead whether it has 15 or 150 passengers.

Bryan agreed that many domestic flights right now are dirt-cheap," which likely signals extremely low demand.

But because the airlines are, well, airlines, they know demand will be back eventually, said Bryan. So they sit tight, pay their fixed costs, try to fill seats and wait.

It's no secret that this past year has been a rocky one for airlines, from all the cancelled flights, to the extra safety costs of running an airline during a pandemic, from the furor over refunds to the Air Canada bailout package (other such packages may be on the way for WestJet and other airlines).

Air Canada's bailout package, the results of months of talks with the government, is worth up to $5.9 billion. In exchange for the aid, Air Canada had to agree to a number of requirements, including giving refunds and reinstating regional routes.

Air Canada spokesperson Peter Fitzpatrick said in an email the airline is anticipating pent-up demand as restrictions ease, and said fares fluctuate based on demand, seasonality and market conditions.

With provinces setting timelines for reopening, we are promoting our services because Canadians are now planning future travel," said Fitzpatrick.

WestJet spokesperson Madison Kruger said demand is being impacted by inconsistent travel guidance and policies."

We are watching provincial reopening plans carefully and as demand increases fare prices will naturally adjust based on supply and demand," said Kruger in an email.

The pandemic has added extra costs for the airline industry that will negatively impact ticket prices in the long term, such as rising airport improvement fees and Nav Canada rate increases, Kruger added.

While countries around the world have taken action to limit or defer costs to the aviation industry during the pandemic, Canada's situation has remained exacerbated by double-digit increases that are beyond our control," she said.

John Gradek, a former Air Canada executive and head of McGill University's Global Aviation Leadership Program, said the airlines have already scheduled more flights for the fall - around three times as many daily as they're currently offering on some routes - which shows that they're preparing for demand to rise, and testing the waters to see how consumers are feeling.

What you're seeing is basically a bunch of trial and error," he said.

Gradek predicts ticket prices will rise once the Canadian government announces plans to lift or weaken travel restrictions.

Currently, Air Canada's cheapest ticket price includes exchanges for zero fees, but no refunds. WestJet's cheapest offering advertises a one-time change or cancellation for no fee.

Gradek said airlines are using this flexibility to give consumer the confidence to purchase that cheap flight they've been eyeing.

Buying airplane tickets is a bit of a psychological game, said Gradek - customers want to get tickets at the lowest price possible, but will also pay a higher price for a ticket that they need (that's why tickets are so expensive around Christmas, even in 2021).

Dimanche said flights to some international destinations are also cheaper right now.

It just depends on travel restrictions and the state of the pandemic in each country, he said.

The airlines know restrictions will begin to lift soon and are preparing for demand to go up when that happens, said Dimanche. It's especially important this year to drum up interest in domestic travel, he added, because the airlines know most of their business will be domestic.

They are trying to generate demand, or at least attention and awareness that travel is possible," he said.

WestJet and Air Canada are also likely trying to compete with Flair Airlines, whose prices are even lower than the established airlines, Dimanche said.

Flair is relatively new, and is trying to get a wedge into the market," he said.

Bryan said we just need to look to the United States to see what could happen in the coming months. There, flights are beginning to move closer to normal volume, and prices are heading back up too, he said.

It'd be surprising if anything travel related does not continue to go up in price as you come into the summer," Bryan said.

In the long term, Dimanche believes the cost of travel will go up for a variety of reasons, including increased sanitation, rising airport fees and the likelihood that business travel won't return to pre-pandemic levels.

Rosa Saba is a Toronto-based business reporter for the Star. Follow her on Twitter: @rosajsaba