VANCOUVER (Reuters) - Canada's airline industry isrecovering slowly in 2010 from last year's plunge in demand,but cost-conscious travelers are making it hard for the sectorto raise prices and recuperate fully, according to a reportreleased Monday.
The sector, dominated by Air Canada and WestJetAirlines Ltd, is expected to post a pre-tax profit ofC$192 million ($186 million) this year, the Conference Board ofCanada said.
That is a sharp turnaround from a pre-tax loss of C$380million last year, the industry's first loss in five years, asthe economic recession gutted travel demand worldwide.
"Passenger counts are up and airlines are enjoying amuch-improved 2010, but the industry is still several yearsaway from approaching its pre-recession profit levels,"Conference Board economist Maxim Armstrong said in astatement.
"Air travelers are willing to fly, but only if the price isright, so airlines have limited ability to increase fares evenwhen costs such as fuel are on the rise," he said.
Canadian industry profits are expected to reach about C$360million in 2011, rising to C$500 million by 2014, theindependent research organization said.
"Airlines will have to wait until next year -- when theeconomy will be on more solid ground, and consumers andbusinesses are more confident in their financial situation --to boost their prices," Armstrong said.
Shares in No. 1 carrier Air Canada, which a year agoteetered on the verge of bankruptcy but is now on a strongerfooting, are up nearly 90 percent so far this year.
Stock of low-cost rival WestJet, which was one of the fewNorth American airlines to remain profitable through therecession, is largely unchanged since the start of the year.
($1=$1.03 Canadian) (Reporting by Nicole Mordant; editing by Rob Wilson)