Business
Demand for travel is high. Here’s what’s expected at Canada’s airports this summer
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Remember the images of travel from last summer and the more recent winter holidays? The lost bags, long waits on tarmacs and piles of luggage in arrivals? Some of Canada’s airports are promising travellers those scenes won’t be the norm this summer.
“We have heard our customers,” said Greater Toronto Airports Authority president and CEO Deborah Flint at Pearson International Monday. “The anxiety, the uncertainty, the frustration, and the lack of control that was felt by passengers last year is one that we will never forget.”
With almost all COVID-19-related travel restrictions lifted, it’s expected that the pent-up desire to get away will result in even higher numbers of Canadians travelling by air over the coming months.
“Demand is really, really strong,” said travel agent Ken Stewart, owner of Crowfoot Travel Solutions in Calgary. “Everybody started to travel again last year. And those who didn’t get away last year are adding to the numbers that are getting away this year.”
Stewart says that demand is being seen right across the board heading into summer — with people wanting to fly domestically, to the U.S., to Europe and even still to sun destinations.
What’s happening at YYZ (Toronto)
Pearson, Canada’s largest airport, last summer saw overflowing baggage halls, stranded passengers, flight delays and cancellations. But Flint says things will be different this year.
Last summer, on-time performance was at just 35 per cent, she said. “Currently, our airlines are departing with 70 per cent on-time performance statistics,” she said.
Over the past year, Pearson has hired 10,000 new employees — an increase of almost 22 per cent — for a total of 50,000 workers — about on par with 2019 levels. That includes 130 new staff announced last week to help in critical areas at Pearson such as busing, baggage handling and terminal operations.
Federal Transport Minister Omar Alghabra was grilled by members of a parliamentary committee today about why the government hasn’t done more to alleviate the months of airport chaos that Canadian travellers have been facing.
The airport expects about 80 per cent of the summer traffic it saw before the pandemic — an increase of about 10 per cent over last year. And Flint says employees are now more experienced, too.
“Last year, we saw an environment where there was rapid hiring,” she said, referring to the period just after many travel restrictions were lifted and there was a huge surge in air travel. She attributed some of the slow-downs in certain processing areas of the airport to inexperience.
“This is a very complicated business for an entry employee to work,” Flint said. “It’s highly regulatory and complex, so learning that environment day one or day two or week two on the job is very difficult.”
Key systems have also been upgraded. The airport has streamlined its contactless check-in and boarding processes through a new partnership with the Canada Border Services Agency to deploy biometric e-gates and speed up customs clearance for travellers.
The airport is also using artificial intelligence to better manage passengers’ checked bags.
What’s happening at YUL (Montreal)
Montréal–Trudeau International Airport says it has also been working to increase staffing levels and will complete improvements to its baggage-handling systems and connecting passenger facilities in June. It expects summer passenger traffic to return to 2019 levels, when the airport saw six million travellers from June to August.
“Obviously, given the high number of passengers expected this summer, it is possible that there will be a little more waiting than usual during peak hours, especially in the early morning and late afternoon and evening,” said Aéroports de Montréal communications adviser Eric Forest in an email to CBC News.
The airport is encouraging passengers to use all of the technology available to them to make the process smoother. That includes YUL Express, which lets travellers pre-book passage through the security checkpoints, and Mobile Passport Control, an app that allows people to submit passport information and customs declaration in advance of U.S. departures.
What’s happening at YVR (Vancouver)
Vancouver’s YVR says it expects August will be its busiest summer month, but is anticipating an average of 81,000 passengers to pass through its doors each day of summer — about on par with pre-COVID numbers.
“In preparation, we have worked with airlines as they’ve developed their summer schedules to make sure we are ready to get passengers where they want to go safely and efficiently,” a YVR spokesperson said in a statement emailed to CBC News.
The airport says it’s reviewing each area of its operations and service to match summer demand, a move that followed last winter’s service disruptions.
What’s happening at YYC (Calgary)
While Calgary’s airport did not didn’t experience the kinds of delays other hubs did last year, president and CEO Bob Sartor says with high demand across the country, there’s always potential for spill-over effects.
“I think there’s going to be hiccups here and there. There’s only so many agency staff that are available from the federal government,” he said in Calgary last week.
“It’s going to be a question of managing flight flow. You know, air carriers like to operate on peaks… and we have to make sure that those peaks are not so high that they can’t be properly serviced.”
What the airlines are planning
Air Canada says it is taking “a prudent approach” to scheduling this summer, planning to operate 90 per cent of its pre-pandemic summer 2019 schedule. “Despite less flying, we actually have more people on staff than in summer 2019 and this should further help with resiliency,” a spokesperson for the airline said in an email.
“We have added resources and taken other measures too, such as adjusting our schedule to create more connection time for customers and to flatten out peak flying periods during the day for better customer flow.”
A looming concern for some travellers is potential labour unrest at Canada’s other major airline, WestJet.
About 1,850 WestJet pilots with the Air Line Pilots Association are poised to strike as of May 16, which could result in anything from refusal to do overtime to a full-blown strike.
It’s not clear what that could mean for people who already have travel booked with WestJet, but Sylvie De Bellefeuille, a lawyer with Option Consommateurs, a nonprofit organization promoting consumer rights, told CBC News last week that she believes refunds should be offered.
How travellers and travel agents are strategizing
Avid traveller Sarah Pew says after a frustrating hours-long long tarmac wait on an Air Canada flight in January, and no compensation, she and her husband decided to go with WestJet’s discount subsidiary Swoop for a June trip to the Dominican Republic.
She’s a little worried about it, but with inflation driving up the cost of airline tickets, it was all about the bottom line.
“We were like, let’s just give it a try,” she said. “Worst case scenario, we’re four hours late again, or a day delayed, but at least this is half the price.”
Stewart, the travel agent from Calgary, agrees prices are much higher than people might be used to due to inflation, higher jet fuel costs and sheer demand — but says in his experience, the actual airport experience, in terms of wait times and delays, has improved in recent months.
He suggests booking early to get the best prices, and to always buy travel insurance.
Pew says she and her husband have simply adopted a fatalistic approach to travel — expecting something will go wrong on every travel day.
“Whether we get bumped from our seats or our flight is delayed or we get pulled into secondary search, expect one thing to go wrong so that we’re not so frustrated and upset when it does.”
The federal government has announced several changes to the Air Passenger Bill of Rights, including closing loopholes that let airlines cancel or delay flights without giving compensation.
Are you flying somewhere this summer and worried about airport congestion or the price of flights? We want to hear your travel plans and any concerns you might have. Send an email to ask@cbc.ca to get in touch with us, or leave a comment.
Business
Brent may rise toward $100/bbl as Saudi output cut could worsen supply gap – analysts – Yahoo Finance
By Florence Tan
SINGAPORE (Reuters) – A global shortfall in crude oil supply is set to deepen in the third quarter as the world’s top exporter Saudi Arabia pledged extra output cuts from July in a move likely to push Brent towards $100 a barrel by the end of the year, analysts said.
Oil prices jumped more than $1 a barrel on Monday as the Saudi energy ministry said on Sunday its output would drop to 9 million barrels per day (bpd) in July from around 10 million bpd in May, the kingdom’s biggest reduction in years.
The voluntary cut pledged by Saudi is on top of a broader deal by the Organization of the Petroleum Exporting Countries and their allies including Russia to extend production cuts into 2024 as the group seeks to boost flagging oil prices.
“Saudi Arabia has a track record of delivering on material cuts,” RBC Capital’s Helima Croft said in a note.
“Hence, we would expect the full 1 million bpd unilateral cut to hit the market in July, nearly doubling the true physical reduction we have seen from the producer group since October.”
The move has paved the way to tighter supplies and put a $70 a barrel floor under prices, analysts said, however the Saudi cut is not likely to drive prices sharply higher immediately as it will take time for inventories to be drawn down.
“With Saudi Arabia protecting oil prices from sliding too low by cutting production, we think oil markets are now more prone to a shortfall later this year,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
“We think Brent futures will rise to $85/bbl by Q4 2023 even with a tepid demand recovery in China factored in.”
Goldman Sachs analysts Daan Struyven and Callum Bruce said the “moderately bullish” OPEC+ meeting partly offsets some bearish risks to the bank’s December 2023 price forecast of $95 a barrel, including stronger-than-expected supply from Russia, Iran, and Venezuela, and weaker-than-expected Chinese demand.
ANZ said the potential for a strong rally in crude prices had risen sharply as supply is expected to tighten significantly in the second half of the year if the U.S. Federal Reserve pauses interest rate hikes and macroeconomic headwinds ease.
“Investors are likely to add bullish bets, comfortable that Saudi Arabia and OPEC will provide a backstop should the market hit any hurdles,” ANZ analysts Daniel Hynes and Soni Kumari said in a note, maintaining their year-end target of $100 a barrel for Brent.
However price gains may be limited in the short term until there are signs of tightening in the physical market, they added.
By contrast, the United Arab Emirates was allowed to raise output targets by around 200,000 bpd to 3.22 million bpd while Russia, African and other smaller producers cut their quotas to bring them into line with their actual production levels.
“ADNOC’s investment in expanding spare capacity and its Murban (price) benchmark has fueled concerns that it might eventually look to exit the producer group and fully monetize these investments,” RBC’s Croft said.
“Affording it the 200,000 bpd quota adjustment for 2024 seems to settle the issue of its OPEC membership for now.”
(Reporting by Florence Tan; Editing by Sonali Paul)
Brent prices could hit $100 by the end of this year as the new 1 million bpd production cut Saudi Arabia announced on Sunday would further tighten the oil market, analysts said after the OPEC+ meeting this weekend.
The OPEC+ producers decided to keep the current cuts until the end of 2024, while OPEC’s top producer and the world’s largest crude oil exporter, Saudi Arabia, said it would voluntarily reduce its production by 1 million bpd in July, to around 9 million bpd. The Saudi cut could be extended beyond July, Saudi Energy Minister Prince Abdulaziz said on Sunday, describing the announced reduction as a “Saudi lollipop.”
“With Saudi Arabia protecting oil prices from sliding too low by cutting production, we think oil markets are now more prone to a shortfall later this year,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note carried by Reuters.
Even if China’s oil demand is not as strong in the second half of this year as expected, Brent Crude futures are set to rise to $85 per barrel by the fourth quarter of 2023, Dhar added.
Early on Monday in Europe, Brent Crude traded at $77 per barrel, up by 1% on the day.
ANZ analysts Daniel Hynes and Soni Kumari reiterated their $100 per barrel Brent target for the end of the year, saying that “Investors are likely to add bullish bets, comfortable that Saudi Arabia and OPEC will provide a backstop should the market hit any hurdles.”
“The oil market now looks like it will be even tighter in the second half of the year,” ANZ noted.
Goldman Sachs, which sees Brent at $95 per barrel in December, described OPEC+’s meeting as “moderately bullish” to its forecast and offsetting some bearish downside risks such as higher supply from sanctioned Russia, Iran, and Venezuela and weaker-than-thought Chinese demand.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana Paraskova
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
The relentless rally in big tech, options positioning and bets on a Federal Reserve pause following a mixed jobs report put stocks on the verge of a bull market.
An advance of roughly 1.5 per cent for the S&P 500 extended the benchmark’s surge from its October low to nearly 20 per cent. A gauge of megacaps like Tesla Inc. and Apple Inc. saw its sixth straight week of gains — the longest winning run in since July 2021. Broadcom Inc. climbed after predicting that sales tied to artificial intelligence will double this year.
As stocks rose, Wall Street’s “fear gauge” plummeted to pre-pandemic levels. The Cboe Volatility Index, or VIX, dropped below 15 from an average of 23 in the past year. The risk-taking mode also drove the Russell 2000 index of small caps — the home of several regional banks — up about 3.5 per cent
“The impressive run for equities continues to drive retail investors into the market,” said Mark Hackett, chief of investment research at Nationwide. “Investors have spent much of the past three years obsessed by the Fed, inflation, and payrolls, though volatility around those reports has settled, reflecting a less emotional market. This is bullish, as less reactivity is a sign of a healthy market.”
Options Positioning
To Andrew Brenner at NatAlliance Securities, the melt-up in equities has a lot to do with one thing: positioning.
“Options traders were off sides,” Brenner said. “We think they get back onsides next week, and the rally will run out of steam.”
Indeed, the stock advance doesn’t mean the market isn’t facing headwinds, according to Quincy Krosby, chief global strategist at LPL Financial.
Among the risks, she cites the potential ramifications of the deluge of Treasury notes — approximately US$1 trillion — to be auctioned as the US department replenishes its general account following a debt-limit deal. that could ignite a significant sapping of liquidity from financial markets, she noted.
“That the Fed has telegraphed that June 14 is off the table for a rate hike no doubt reflects its concerns regarding the potential for increased market volatility stemming from dissipating liquidity,” Krosby said. “Still, today’s across-the-board rally confirms that the market doesn’t see an impending recession despite the incessant calls for one.”
Signs of labor-market slackening in May despite a pickup in hiring could strengthen the argument from Fed Chair Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again.
Wall Street’s reaction to the latest jobs report showed bets that another Fed hike is likely in the bag — but that wouldn’t necessarily happen in June.
Two-year yields, which are more sensitive to imminent central bank moves, jumped 16 basis points to 4.5 per cent.
Some 25 basis points of tightening were fully priced in across the next two meetings for part of the trading session Friday. Around 9 basis points was priced in for June, indicating a less than one-in-two chance of any hike being at this month’s meeting.
“The key question now is: can they wait until July or does this monster payrolls number trigger another burst of urgency?” said Seema Shah, chief global strategist at Principal Asset Management. “Perhaps the report details, with the unemployment rate rising and average hourly earnings growth slowing, tilts the decision to July.”
The Fed should be open to raising interest rates by a half percentage point in July if it opts to hold off from tightening this month, former Treasury Secretary Lawrence Summers said.
“We are again in a situation where the risks of overheating the economy are the primary risks that the Fed needs to be mindful of,” the Harvard University professor said in an interview with Bloomberg Television’s David Westin on Friday.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 1.4 per cent as of 4 p.m. New York time
- The Nasdaq 100 rose 0.7 per cent
- The Dow Jones Industrial Average rose 2.1 per cent
- The MSCI World index rose 1.5 per cent
Currencies
- The Bloomberg Dollar Spot Index rose 0.2 per cent
- The euro fell 0.5 per cent to US$1.0708
- The British pound fell 0.6 per cent to US$1.2450
- The Japanese yen fell 0.8 per cent to 139.97 per dollar
Cryptocurrencies
- Bitcoin rose 1.4 per cent to US$27,251.37
- Ether rose 2.1 per cent to US$1,908.83
Bonds
- The yield on 10-year Treasuries advanced 10 basis points to 3.69 per cent
- Germany’s 10-year yield advanced six basis points to 2.31 per cent
- Britain’s 10-year yield advanced four basis points to 4.16 per cent
Commodities
- West Texas Intermediate crude rose 2.7 per cent to US$71.98 a barrel
- Gold futures fell 1.5 per cent to US$1,965.20 an ounce
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