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Vacation operators tacking on new $35 ‘currency surcharge’

Air Transat, Sunwing and Air Canada Vacations are uniformly moving to adopt new surcharges to recover costs related to a falling currency.
Air Transat, Sunwing and Air Canada Vacations are uniformly moving to adopt new surcharges to recover costs related to a falling currency. Canadian Press

A lower loonie is lifting the price tag on vacation packages as Canadian tour operators follow through on plans to impose new ‘currency surcharges’ starting next week.

Transat, the country’s largest tour operator, says it’s tacking on a new $35 charge to its vacation packages beginning Jan. 27, a move being copied by competitors Sunwing Vacations and Air Canada Vacations.

The new fees being implemented by Sunwing and Air Canada — both also $35 — will be in place by the end of the month, according to each company.

READ MORE: Sun seekers face new surcharge as loonie nosedives

There is one outlier among the pack of operators, however. WestJet Vacations has so far resisted the move to impose a fee that the others say is necessary to recover some costs lost to a fast-depreciating loonie.

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Packaged-tour operators deal primarily in U.S. dollars when securing everything from blocks of hotel rooms at resorts to buying jet fuel.

Hedging contracts that guarantee a fixed exchange rate for a period of time remove some of the risks that a sudden decline in the loonie will see those operating costs shoot higher.

But with the dollar tumbling to multi-year lows and the odds good it will stay depressed for awhile, operators are moving to gird themselves as much as possible for the higher costs they’ll face in the months and quarters to come.

The Canadian dollar was trading below 90 cents US on Thursday and has lost more 10 per cent of its value relative the U.S. greenback over the last 12 months – and four per cent this month alone.

READ MORE: Loonie dives below 90 cents after currency ‘thrown under the bus’ 

The loonie’s slide stems largely from a weaker economic outlook this year compared to the U.S. economy as Canadians jostle with record debt levels and a potential slowdown in the housing market.

The decline means higher prices are coming consumers’ way for a wide range of consumer goods, from gasoline to groceries, experts say.

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