After entertaining new entrants for a number of years, Canada’s airline market is as soon as once more on the trail to consolidation, elevating the probability of upper fares and fewer flight choices.
Since Could, newer low-cost carriers Swoop and Lynx Air have disappeared from the skies and WestJet has scooped up Sunwing Airways.
The latter two alone made up 37 per cent of seat capability on direct flights to solar locations and 72 per cent from Western Canada final yr, based on an October report from the Competitors Bureau. It mentioned eliminating the rivalry between WestJet and Sunwing would doubtless suppress competitors across the sale of trip packages.
Some specialists warn that the shrinking airline tally might imply much less service and better costs, notably within the West and smaller markets throughout the nation.
Excessive airport rents, safety charges and gasoline taxes increase the baseline value of flying, making it tougher for price range airways to coax budget-conscious Canadians on board.
“The excessive charges actually make it more difficult for the low cost carriers,” mentioned College of Manitoba transport institute director Barry Prentice.
The market’s decades-long domination by Air Canada and WestJet may stifle competitors, some business gamers argue.
Air Canada and WestJet command 79 per cent of home site visitors as of this month versus 74 per cent a yr earlier, statistics from aviation knowledge agency Cirium present.
“The pure behaviour of the duopoly is to make use of their energy to squeeze the pricing out of the smaller gamers,” mentioned Aptitude Airways CEO Stephen Jones.
“There isn’t a curiosity by the massive carriers in having low-cost carriers succeed, and so they’ll use the instruments that they’ve bought within the toolkit to attempt to convey carriers like Lynx to an finish,” he claimed.
In late 2018, the Competitors Bureau opened an investigation into predatory pricing techniques allegedly deployed by WestJet and its then subsidiary Swoop on some routes flown by Aptitude, which had launched the earlier yr.
The regulator wound down its probe roughly 5 years later with out taking additional steps. The choice got here regardless of then interim competitors commissioner Matthew Boswell accusing WestJet and Swoop in 2018 of “participating in … predatory pricing by considerably lowering the costs of their passenger tickets to a degree that seems to be beneath their avoidable prices.”
Lynx, which launched its first flight in April 2022 and shut down final month, mentioned in court docket filings that rising prices, airports costs and “a aggressive aviation panorama have proved disastrous” to producing adequate income.
Different components pose a problem to younger upstarts trying to increase, quite than consolidate, Canada’s aviation skyscape.
An absence of huge, secondary airports in massive cities may drive smaller airways to bid for the higher-priced slots at Toronto’s Pearson and Montreal’s Trudeau airports. Executives have lengthy complained about quantities charged for gate and touchdown charges in addition to federal company bills akin to safety screening and air navigation.
In the meantime, the age-old drawback of an enormous, sparsely populated geography creates distinctive challenges for all carriers in Canada, however particularly these struggling to get off the bottom.
Within the U.S., older low cost carriers akin to Southwest Airways and JetBlue have provided point-to-point companies between bigger cities and markets over comparatively quick distances. The aim is to squeeze extra income out of every aircraft with a number of journeys per day and decrease gasoline prices, with prospects in a position to endure the tight quarters because of the faster journeys.
In Canada, nevertheless, the variety of sizable city areas is way smaller, with main gamers already current within the extra profitable ones.
