Airfare to the U.S. rises as carriers cut capacity, pushing Canadians to other destinations
Average economy fares from Canada to the U.S. rose 8% year over year in December, to $522, as airlines cut southbound capacity and travellers shift to Mexico, Europe and Asia.
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By Torontoer Staff
Average economy fares from Canada to the United States rose 8 per cent year over year in December, reaching about $522, according to travel search engine Kayak. The increase comes despite persistently low demand for travel to the U.S., with airlines reducing seat capacity on southbound routes.
The result is higher prices for the travellers still willing to fly to U.S. cities, while carriers redeploy aircraft to markets where Canadians are booking in greater numbers, such as Mexico, Europe and parts of Asia.
How capacity cuts pushed prices up
Airlines trimmed flights to the United States after a period of depressed demand earlier last year. In spring 2025, fares to popular U.S. destinations fell sharply as passenger interest dropped. Carriers then pared back schedules and substituted smaller aircraft, which reduced available seats and pushed average fares higher.
A spokesperson for Flight Centre Travel Group Canada, Amra Durakovic, said airlines were initially slow to adjust capacity, running at near-full schedules in the early months. "February, March, April, that’s sort of when we saw the drop in prices, because airlines were still running at full capacity. Then they adjusted," she said.
Demand remains low, but business travel is steady
Public sentiment has continued to dent leisure travel to the U.S. An Abacus Data poll conducted Jan. 9 to 14, which surveyed 1,850 Canadian adults, found 68 per cent had not travelled to the United States in the past year. One third of respondents said they would think less of family or close friends who had visited the country recently.
Despite overall weakness in leisure bookings, corporate travel to the U.S. has held up. Beth Nanton, a partner and U.S. immigration practice leader at KPMG Law, noted that multinational firms still need personnel to cross the border for work. Data from SAP Concur showed Canadian business travel to the U.S. in the first half of 2025 remained broadly stable, accounting for 79 per cent of Canadian corporate outbound travel in that period.
Which airlines and routes were affected
Aviation consultancy OAG reported a roughly 10 per cent reduction in Canadian airline capacity to the United States in the first quarter of 2025. WestJet cut capacity by about 19 per cent, Air Canada by 7 per cent and low-cost carrier Flair by 58 per cent, with many of those reductions rolling out from mid-2025 onward.
Some specific routes have already felt the change. Kayak data showed winter fares to Orlando from Toronto and Montreal increased about 7 and 9 per cent year over year, respectively.
Where Canadians are going instead
Airlines have responded by scaling up services on routes where Canadians are still booking. Mexico has become the most visited overseas country by Canadian residents in Statistics Canada’s measurements for the second quarter of 2025, followed by France and Britain. Japan saw an 88 per cent year-over-year rise in Canadian visitors in that quarter, Spain was up 70.5 per cent and France nearly 50 per cent.
Carriers have launched or expanded non-stop options to meet that demand. Flair opened non-stop flights to Mexico City from Toronto and Vancouver last fall, offering one-way fares from about $141. Air Canada announced new seasonal North American non-stop service to Sapporo from Vancouver, starting in December 2026.
Practical tips for travellers facing higher fares
- Book earlier for U.S. trips: reduced seat inventory can make last-minute fares expensive.
- Compare nearby international alternatives: flights to Mexico, parts of Europe or Asia may be cheaper and more frequent.
- Consider non-direct routes: connections through other hubs can sometimes lower the overall fare.
- Watch for airlines’ new seasonal routes, which can introduce lower introductory fares.
- If travel is work-related, coordinate with corporate travel teams, since business itineraries may be less affected.
Multinational companies with a significant presence or sales in the U.S. still need their key personnel to enter the country.
Beth Nanton, KPMG Law
For Canadians weighing a trip south, higher average fares are now part of the calculation. Airlines’ route decisions and seat allocations will continue to influence prices, so travellers should factor in timing, alternative destinations and carrier schedules when planning.
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