03:25 PM EDT, 07/16/2024 (MT Newswires) -- Air Transat (TRZ.TO) on Tuesday announced the launch of two non-stop routes to Tulum, Mexico, from Montreal and Quebec City. From Montreal, this seasonal service will operate from December 19, 2024, to April 27, 2025, with three departures weekly. From Quebec City, flights will be offered every Saturday from December 21, 2024, to April 26, 2025.

According to a statement, Tulum joins four other destinations in Mexico served by Air Transat: Acapulco, Cancun, Cozumel and Puerto Vallarta.

"This new service to Tulum is an important step in our development and diversification strategy in Mexico, one of our most important markets in the South. By adding Tulum as our third destination in Quintana Roo, we are responding to the growing demand for this region, while strengthening our position as the leader in travel to the South from Montreal and Quebec City," said Sebastian Ponce, Transat's Chief Revenue Officer.

This comes as National Bank's Cameron Doerksen noted that in Canadian CPI data for June released Tuesday morning the transportation component increased y/y for the second straight month and was ahead of June 2019 (pre-COVID).

CPI data shows airfares in Canada have strengthened the last four months following an 11-month stretch of y/y declines (on difficult comparables) and remain ahead of pre-pandemic levels. However, Doerksen expects to see some overall yield softness for Air Canada and Transat in the near term due to tough comparables and more competitive capacity, particularly on trans-Atlantic routes (for Air Canada, he forecasts a ~4% y/y decline in overall unit revenue in each of the secondr and third quarter). Also, following the strike from WestJet's mechanics union over the Canada Day long weekend, WestJet may need to be more aggressive with its pricing in the short term to rebuild loads, which could put some downward pressure on overall industry yields in the coming months, Doerksen adds.

At National Bank, Air Canada is rated Outperform, with a $28 target. Transat rated Underperform, with a $2.25 target.

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