{"id":471156,"date":"2010-03-25T09:09:00","date_gmt":"2010-03-25T13:09:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:413181"},"modified":"2010-03-25T09:09:00","modified_gmt":"2010-03-25T13:09:00","slug":"air-fares-rising-but-will-they-stick","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/471156","title":{"rendered":"Air fares rising, but will they stick?"},"content":{"rendered":"

Canadian airlines have been steadily raising fares as passenger demand returns. But the question remains whether those increases will stick with competition heating up in the domestic market later  this spring, said Ben Cherniavsky, Raymond James analyst.
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Fares at both Air Canada and WestJet Airlines Ltd. have increased 17% and 22% respectively compared to last year, according to Raymond James\u2019 monthly air fare survey.
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The only notable exception was a $29 fare offered by WestJet on a Toronto-Montreal route compared to $79 last year, which Mr. Cherniasky said is consistent with his belief that Porter Airlines was having a disruptive effect in the so-called Eastern Triangle between Toronto, Montreal and Ottawa.<\/span><\/font><\/font><\/p>\n

While Mr. Cherniavksy conceded that the increases fly in the face of his assumption that domestic yields will remain under pressure in 2010, he said it was premature to say whether they would stick.
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\u201cToday\u2019s more impecunious fliers may get sticker shock and force fares back down,\u201d he said.
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The true test will come in late spring and summer when WestJet moves the bulk of its capacity back into the domestic market out of the Caribbean and Mexico, he noted.
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Mr. Cherniavsky reiterated his preference for Air Canada shares over WestJet due to its greater exposure to international routes, business travelers, and cargo \u2013 all of which he is convinced are undergoing a recovery. <\/span><\/font><\/font><\/p>\n

He also raised his price target on Air Canada to  $3.50 share from $2.25 previously, and held WestJet\u2019s at $13.50, accordingly. <\/span><\/font><\/font><\/p>\n

David Newman, National Bank Financial analyst, also raised Air Canada to an "outperform" Wednesday, and raised his price target to $3.50 a share, from $1.75 previously, with the potential for a greater upside in the second half of the year and ongoing cost-cutting efforts.<\/span><\/font><\/font> <\/p>\n

At the same time, Air Canada will likely see some pricing pressure this spring with Porter plotting an aggressive expansion in the Eastern Triangle, said Cameron Doerksen, Versant Partners analyst.
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\u201cThis is a significant increase in capacity on already well served routes, which is bound to put downward pressure on air fares,\u201d he said in a note to clients. \u201cGiven that Air Canada has more capacity committed to these routes, we would expect it to be more impacted than WestJet from Porter\u2019s expansion.\u201d
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Unlike Mr. Cherniavsky, Mr. Doerksen prefers WestJet, which he has a \u201cbuy\u201d rating on, to Air Canada, which he has a \u201cneutral\u201d rating on.
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He has a $1.60 a share price target on Air Canada and $17 price target on WestJet because improved unit revenue this year from the higher fares will likely drive WestJet's stock higher in the coming months.<\/span><\/font><\/font><\/p>\n

 <\/p>\n

Scott Deveau <\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Canadian airlines have been steadily raising fares as passenger demand returns. But the question remains whether those increases will stick with competition heating up in the domestic market later  this spring, said Ben Cherniavsky, Raymond James analyst. Fares at both Air Canada and WestJet Airlines Ltd. have increased 17% and 22% respectively compared to last […]<\/p>\n","protected":false},"author":6368,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-471156","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/471156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/6368"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=471156"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/471156\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=471156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=471156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=471156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}