Canadians are cutting back on their international travel, but why?

Demand for international travel says a lot about the state of the world. It soars when people are feeling good about their finances and when the world is relatively peaceful; and it suffers when the economy goes pear-shaped and when war and terrorism are top concerns.

For years in Canada, the boom in international travel to countries other than the United States was a good news story. In October, Statistics Canada released its latest international travel numbers showing that 992,872 Canadians had returned from a foreign country other than the United States in August 2018, some 46 percent higher than the 679,234 Canadians who did so 10 years earlier in August 2008.

A closer look at the numbers, however, revealed more disturbing news: Canadians have been cutting back on their travel in 2018. The 992,872 who came home from abroad in August was down eight percent from the 1,074,086 who did so in August 2017.

Statistics Canada’s collection of data on Canadians’ international travels goes back to January 1972, which makes it possible to track year-over-year changes going back to January 1973.

Of the worst 10 percent of the 548 months for which year-over-year data is available, five of those months occurred during 2018 — January, and May through August.

Why is this slump happening, in a year when airlines have been adding new capacity to foreign destinations and prices have remained about the same? Is it a response to an increasingly uncertain foreign world, or a sign that Canadians are feeling apprehensive about their financial circumstances?

Let’s look back at similar slumps.

One such rough patch happened from Sept. 1979 through Aug. 1981, which featured 24 consecutive months of year-over-year shrinkage amid high inflation and an economic recession, with the worst months being between Mar. 1980 and Mar. 1981.

The summer of 1986 was also particularly bad, with results for each month from May through September being five to 10 percent worse than the same months in 1985. This slump cannot be blamed on the economy, which was going through a relatively good stretch in 1986. The previous year, however, had featured several terrorist incidents — including the Air India bombing and the coordinated assault rifle and grenade attacks on the check-in areas at the Rome and Vienna airports — and high-fatality airliner crashes at Dallas/Fort Worth Airport and in Japan.

The economy pummelled traveler numbers again in the early Nineties, with some months during 1991 being more than 10 percent off the same month in 1990 as Canada went through its second severe recession in a decade, with unemployment rates hitting 10 percent.

Apart from some weakness in 1999-2000, the next serious drop in traveler numbers took place from Oct. 2001 through Aug. 2002, undoubtedly on account of the 9/11 terrorist attacks.

What is behind the travel slump of 2018 is not yet clear, but one can hope that it’s simply a sense of unease about the state of the world, and not the chill of an oncoming recession.

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About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

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