Fuel prices and travel plans
The Economist unpacks Toronto Mans, the market for career coaches.
Good afternoon everyone.
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Like many of you, I’ve been trying to realize a vision for my summer travel plans that involves an Aperol Spritz on a beach, very far away. It’s a privilege to have this on my list of priorities right now. It’s also, increasingly, a complicated ask.
The near-doubling of jet fuel prices in recent weeks—a downstream effect of the conflict between the U.S. and Iran that has blocked the flow of crude oil through the Strait of Hormuz—has triggered fare hikes, route cuts, and surcharges across the global airline industry. Fuel is an airline’s second-largest expense after labour, accounting for approximately 20–30% of costs. When that number rises, carriers, already operating on razor-thin margins, typically can’t—or won’t—absorb it.
Earlier today, Statistics Canada reported a 21.2% jump in gasoline prices (like jet fuel, gas is refined from crude oil) in March, the largest jump on record. If you’re travelling from Toronto, the math is already showing up in your search results.
Air Canada has suspended six “lower profitability routes and flights which now are no longer economically feasible,” including short-haul flights linking Toronto and Montreal with New York’s JFK, and raised baggage fees. WestJet has added a capacity limit on some flights to reduce weight and tacked on a $60 surcharge on lower-profit routes. Globally, all but one of the 20 largest airlines have already reduced schedules. Domestic fares have risen more than international routes.
“Any flying that we’re doing that’s on the margin, maybe not producing the yields we’d like, is likely going to be reconsidered,” Delta’s CEO Ed Bastian said while announcing billions in extra fuel costs this quarter, even though Delta is the only U.S. airline that can offset some costs with its own refinery.
Yet according to an article in The Globe and Mail last month, it will be difficult to asses the real impact: Unlike U.S. carriers but similar to some European ones, Air Canada and Air Transat can mitigate some of the impacts of high fuel prices through hedging (Porter does not hedge, and WestJet and Flair declined to say if they do), though it’s unclear by how much. Experts say that if oil can move freely again, prices will normalize, but not before flyers absorb months of high costs.
It’s worth noting that most of the numbers I’ve seen so far limit route reductions to 1% of an airline’s passenger capacity.
The point isn’t that this inconveniences travellers, but that seemingly far-away energy market shocks are not so far away at all. And if you are able to get on a plane, this may not be the summer to test your luck with an overweight carry-on.
Further reading
—Airlines hit by soaring costs hedge and increase prices (The Globe and Mail)
—The jet-fuel surge is making flight connections disappear (Bloomberg)
—Airline industry hit by biggest crisis since pandemic (Financial Times)
BUSINESS
Anyone noticing the volume of product placements on TV right now? I’m watching Your Friends & Neighbours and I’ve never seen anything like it: so many scenes punctuated by callouts to luxury spirits, or characters’ clothing emblazoned with brand names. Same with Euphoria and White Lotus. Fashion houses have always played a role in financing Hollywood productions, but never has the industry been more reliant on brand money.
CULTURE
The Economist took a long look into ‘Toronto Mans.’ The viral dialect emerged from a cluster of public-housing projects in North York and relies on borrowed words from British slang, like “wasteman” (loser), and “mandem” (a group of men), and immigrant languages, like “two-twos” (being honest) from Patois, or “kawal” (to scam) from Somali. The roots of other words like “crodie” (brother) and “gerbert” (immature) are unclear.
ECONOMY
Some parents are spending upwards of $10,000 on career coaches to help their kids land a job, as entry-level workers face the outsized impacts of AI’s new role in the workforce. It’s not just the AI-driven job cuts, but the increased presence of the technology throughout the hiring process. The math starts to make sense when you consider a slow ramp up in the early stages of your career can have long-term negative impacts on earnings.
TOURISM
Destination Toronto will finally fix signage at Union Station and in the Path as part of a 10-year plan to make the city a better place to visit. The strategy, which is the first comprehensive look at improving tourism (and therefore liveability) in decades, includes developing the waterfront and its transport options, building hotels, turning Exhibition Place into an LA-type events district, and developing a new “globally significant landmark.”
GOVERNMENT
Doug Ford’s $29 million private jet will be put up for sale just days after the province confirmed the purchase, made to support “extensive travel across Ontario.” In a statement, he said, “Despite the best of intentions, I’ve heard and agree that now is not the right time for the expense of a government plane.” He noted Quebec and the feds did not face backlash for newly acquired planes, which are for emergencies and disaster relief.
