Canadians turn domestic for holiday travel, with weak loonie discouraging U.S. trips

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MONTREAL — Barry Choi has noticed fewer full seats on some of his flights over the past year.

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“People are traveling a little less,” said Choi, who runs the personal finance and travel site Money We Have, which takes him on a plane every four to six weeks.

This is a trend he wouldn’t have predicted two years ago, when the desire to escape became almost palpable after COVID-19 border closures ended and air travel became possible again.

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“Because of this pent-up demand from the pandemic, people have kind of made their trips. In 2022, I feel like everyone was traveling. Everyone was like, “I have to get him out.”

“Some waited until 2023, but this year everyone kind of calmed down,” he said.

This pattern is likely to continue into December and January. After heading abroad for the holidays last year, more Canadians are keeping their travel plans within the country this Christmas season due to squeezed budgets, falling domestic prices and the decisive end of the post-pandemic boom in outbound travel — and now a falling currency.

The number of Canadian flights to the United States next December is expected to decline by 2.5 percent year-on-year, according to figures from aviation tracking company Cirium.

Meanwhile, domestic flight capacity is set to jump nearly 10% this month compared to December 2023.

Additional flying capacity north of the border has helped lower prices even as demand has risen, with flight prices within Canada down 20 per cent from a year earlier as of September, the last month for which Cirium had data.

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Spokesman Mike Arnott said the decline in flights to the United States — from all Canadian airlines except Porter Airlines, which is rapidly building its fleet and flying south — means “higher airfares overall,” as capacity falls more than demand.

Wallet concerns have curbed spending somewhat, with Gen Z and Millennials thinking twice before splashing out large sums on experiences, including travel.

“We can’t ignore the fact that people are pinched. Interest rates are starting to come down, inflation is getting a little under control, but the cost of housing and the cost of living are still top of mind,” said Ramzi Rahbani, Vice President of FlightHub.

A survey from the travel platform found that just over half of Canadians plan to postpone trips over the holidays.

Thoughts of moving away from the United States may loom larger after the Canadian dollar, already hovering near 72 US cents, fell to its lowest exchange rate in years following President-elect Donald Trump’s proposal to impose a 25 per cent tariff on imports from Canada.

“I make a lot of people think: ‘Do I still want to go to the United States?’” Choi said.

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Canadians who typically travel to Florida, Arizona and California during the winter are among those who will feel the dollar’s weakness most keenly.

“For snow lovers, the United States is definitely becoming more expensive,” said Jill Weeks, a travel expert speaking from Sarasota, Florida.

“All kinds of people took credit for the things that were canceled in 2020 and 2021, especially cruise lines.” These vouchers and travel credit have now been spent.

Millennials — who now outnumber baby boomers in Canada — and Generation Z together make up more than half of all passengers, according to FlightHub. They noted that family visits are the biggest reason for air travel during the holidays, which helps explain the domestic shift.

Overseas, the capitals of the Philippines and India — Manila and New Delhi — saw some of the highest booking numbers from Canada between December 20 and January 1, according to FlightHub.

“They tend to come back to see family and friends as well,” Rahbani said. At the same time, extensive leisure trips to some sunny destinations have stopped.

Despite the shift toward domestic travel, several general patterns remain. For those venturing south, New York City, Florida and California remain top destinations for almost all age groups.

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“The situation has stabilized,” said Richard Vanderloop, founder of travel agency Tripcentral.ca, referring to travel habits in general. But this similarity to 2023 is itself a big change compared to recent years, which saw huge fluctuations in customer volumes as COVID-19 restrictions came and went.

While passenger numbers at Canada’s eight largest airports rose 4 per cent year-over-year in October, that slightly outpaced population growth, according to Statistics Canada. The 5% increase in air passengers since 2019 was less than the 10% growth in population over that period, meaning lower volumes on a per capita basis.

Nearly a quarter of FlightHub customers said they budgeted between $1,000 and $2,000 for holiday travel. Another 22 percent set aside between $500 and $1,000, and most of the rest set aside less than $500.

This report by The Canadian Press was first published Dec. 8, 2024.

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