Sep 30, 2026
If you’ve looked into booking a vacation, you’re well aware that some of what you’re paying goes straight into the fuel tank. Jet fuel is now running at roughly double last year’s price, a surge triggered by the Iran war that began in late February — and Canada’s smaller airlines are feeling it the most.
Flair Airlines CEO Len Corrado says fuel usually makes up almost a third of the Edmonton-based carrier’s costs, noting how its price has gone up more than 110% since last year. He told The Canadian Press the situation is “hard to navigate,” as higher fares haven’t offset the added expense.
Advertisement
In fact, Ottawa recently approved $76 million in emergency aid for Flair, making it the third carrier, following Air Transat and Porter Airlines, to get a federal bailout in roughly two months.
Thanks for subscribing!
The best of Money.ca delivered weekly.
By signing up, you accept Money.ca Terms of Use, Subscription Agreement, and Privacy Policy.
Why are budget airlines hit harder by fuel costs?
Leisure carriers often rely on price-sensitive consumers as their biggest source of business, since they have fewer of the premium-fare passengers or high-margin business travellers to help offset any socioeconomic headwinds, according BNN Bloomberg.
Passing costs on to travellers isn’t simple either. Air Transat noted how demand dropped when it added fuel surcharges — the company reported a loss of $106.6 million for the three months that ended on July 31. By contrast, an analyst note cited by CP found that Air Canada’s unit revenue rose about 11% in its latest quarter.
The loans given to Flair, Transat and Porter aren’t handouts, as the Crown corporation behind them says the aid must be repaid within four years, at interest below market rates. However, not everyone likes the program: The Globe and Mail notes how WestJet has said it strongly opposes the loans because they distort the market.
Must Read
- Are you paying too much for car insurance? Here are 3 clever ways to slash your monthly bill
- Here are 5 'must-haves' that Canadians constantly overpay for. How many of these are sabotaging your budget every single month?
- Here are the 5 biggest differences between rich and poor Canadians — which side do you fall on?
Join 19,000+ readers and get Money.ca’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
What does this mean for the fares you pay?
It’s a mixed bag. Statistics Canada reports that travel tour prices rose 26.1% year-over-year in August, attributing part of that jump to last year’s drop in Canadian travel to the U.S. and to fuel surcharges due to jet fuel price increases.
Still, BNN Bloomberg notes how this fall season could bring about cheaper fares as demand drops once school begins and work resumes, though lower prices could put even more pressure on airlines.
Advertisement
Routes are also changing, and that may impact flight availability. Flair has increased its domestic and Caribbean service while cutting its Canada-U.S. flights by more than half since last year. If you’re counting on a budget carrier for a trip to America, you may have fewer options than usual.
What happens to your ticket if an airline runs into trouble?
This isn’t a prediction of future business outcomes — but Canada has seen budget carriers fail before, and how they handled refunds is instructive.
When Lynx Air shuttered its operations in 2024, the airline told passengers to seek refunds from their credit card companies. However, those who paid by debit card or airline voucher had greater difficulty receiving theirs.
Provincial protections also have their own limitations. In Ontario, airfare purchased directly from an airline, or via an agency or booking site based outside the province, isn’t eligible for the provincial Travel Industry Compensation Fund, according to TICO guidance. Unused airline credits or vouchers aren’t covered either.
What to do now
If you want to ensure your next flight is protected from any disruption, here are a few low-effort steps that can make a big difference if plans change:
- Pay with a credit card. It gives you a path to a chargeback if a service isn’t delivered that debit cards and vouchers generally don’t.
- Check your credit card’s travel coverage. Some cards include trip cancellation or interruption insurance — be sure to read the certificate to see whether it also covers a travel supplier going bankrupt.
- Compare the full price. Fuel surcharges, bag fees and seat selection can erase a budget carrier’s base-fare advantage rather quickly, so it’s important to factor these in.
- Use travel credits sooner rather than later. Unused vouchers are among the least protected forms of payment if a company goes bust, so try to use them while you can.
- Watch for schedule changes. With carriers reshuffling routes as business demand changes, confirm your itinerary well in advance of takeoff.
You May Also Like
- This 7-step plan from Dave Ramsey is designed to help you ditch debt, save more and build wealth — here’s how it works
- Prioritize these 4 critical investments and watch your net worth skyrocket
- Here are 8 solid money moves that could free up real cash every month — here's where to start
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
The most expensive financial mistakes are often the ones you don't see coming. Join 19,000+ Canadians who get the money moves, risks and opportunities shaping their finances — delivered free each week. Subscribe now.
Writer and editor based in Toronto with experience in personal finance, insurance, arts and culture and branded content.
