Money123: The future of cheap airfare in Canada

Can low-cost carriers work in Canada?

The recent loss of Lynx Air from Canadian skies means Flair Airlines is the last destination for travellers in Canada hoping to get a flight with a so-called ultra-low-cost carrier.

Experts who spoke to Global News say the low-cost model is hard to make work in the Canadian air industry, which is rife with costly airport fees and other challenges that already squeeze airlines’ margins.

But Flair Airlines CEO Stephen Jones tells Global News that he sees no reason why the ULCC model can’t be successful in Canada, as it has been in the United States and Europe.

Despite recent turbulence for the Edmonton-based carrier, Jones says “price-sensitive” customers are proving out Flair’s model amid strong demand for tickets.

“There’s nothing about Canada that says that the ULCC model shouldn’t work. People love to travel and people love a deal,” he says.

Read more about Flair’s prospects in the wake of Lynx Air’s departure.

How to keep dining out despite inflation

Food inflation has been slowing significantly at the grocery store, but when it comes to dining out, restaurant-goers are still feeling the crunch of higher prices.

Statistics Canada data shows prices for food purchased from restaurants increased by 5.1 per cent year over year in January as well as in February, continuing a trend seen last year.

Higher prices might be scaring diners away from eating out as overall seasonally adjusted restaurant sales dipped by 1.9 per cent to $7.9 billion in January, according to StatCan. That’s bad news for an industry still recovering from the effects of the COVID-19 pandemic.

“We’re seeing the impact of our customers having a lot less discretionary spending due to inflationary pressures, and we have been feeling the inflationary pressures for some time now,” Kelly Higginson, president and chief operating officer at Restaurants Canada, said in an interview with Global News.

For those diners still going out to restaurants, some consumers are changing how they plan their meals to keep the experience more affordable.

Read more on what experts say about the state of dining out in a “frugal market.”

Economic futures are at risk in Canada

Longtime readers of this newsletter will know: affordability – particularly in the housing market – is stretched right now.

But Statistics Canada released a report this week showing just how hard things are right now for young Canadians, who are at risk of missing significant financial milestones like buying a home amid the rising cost of living.

“Sustained food inflation, elevated housing prices, and increasingly unaffordable rental costs across much of the country are casting a shadow over the homeownership dream for many households — and, in particular, for young families,” the report read.

These inequities can divide young Canadian renters from their homeowning peers, widening a wealth gap that could have long-standing implications for socio-economic mobility in the country, the agency warned.

Read more on what’s driving these demographics apart, and what it could mean for young Canadians’ economic futures.

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– THE QUESTION –

“Could you give me a good description of a bare trust? I am a co-applicant on my son’s mortgage. The only reason being that his income was too low when he applied for the mortgage. I have no interest in the property other than I would be responsible for the mortgage payment should he default. He may be looking at selling the property this year and using the proceeds as his principal residence.
When he purchased the property it was valued at $600,000, it is now valued at approximately $500,000. Do I have to contact CRA Now to advise them that I would receive no dollars when the property sells? I have never lived in the property.”

— A Money123 reader 

“This has become a hot issue in recent months due to new reporting requirements for trusts which had required “bare trusts” to file a T3 Trust Tax Return and associated Schedule 15 starting in 2023. There is no definition of a bare trust in the Income Tax Act, but the Canada Revenue Agency has defined a bare trust as a ‘trust arrangement under which the trustee can reasonably be considered to act as agent for the beneficiaries,’ and can reasonably be considered to occur ‘when the trustee has no significant powers or responsibilities, the trustee can take no action without instructions from that beneficiary and the trustee’s only function is to hold legal title to the property.’

The good news is that on March 28, 2024, the CRA announced that it will not require bare trusts to file a T3 return, including Schedule 15, for the 2023 tax year, unless the CRA makes a direct request for these filings. The CRA announced that over the coming months, it will work with the Department of Finance to further clarify its guidance on this filing requirement. The CRA will communicate with Canadians as further information becomes available.”

–  Jamie Golombek, managing director & head, tax & estate planning, CIBC Private Wealth

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