With new players entering the market over the last few years, Canadian aviation competition is reaching a head. The Canadian Press recently published two narratives outlining the proliferation of players and how the ramp-up of airline competition is setting the stage for a fare showdown.
The Players
Air Canada continues to maintain its market dominance. Responsible for nearly half the country's domestic capacity is also holding its on the international front.
WestJet caters to almost a third of the domestic market. As the carrier looks to solidify its position, a swarm of rivals from its home base in Alberta are threatening margins.
Air Transat is still navigating post-pandemic repercussions and looking to stabilize finances.
Porter Airlines is on a fast-track expansion for Pearson Airport, in direct competition with Air Canada.
ULCC entrants such as Flair and Lynx are adding aircraft and expanding routes, looking to break the previous duopoly by introducing low fares on popular routes.
Canada Jetlines, with only three aircraft at the current time, is looking to solidify its standing among Canadian travellers by relying on service surpassing that of ULCCs and distributing via the trade.
According to Canadian Press, former Air Canada COO, Duncan Dee commented on the resulting pricing strategies, "Whenever you've got players trying to establish themselves in these markets, it is a boon for consumers."
There's a palpable increase in airlines operating on key domestic routes such as Toronto-Vancouver and Montreal-Toronto. Fares are plummeting due to competition, especially from budget carriers. According to The Canadian Press, the average domestic round-trip ticket dropped to CAD $289 this fall.
The rush for sun destinations this winter is also heating up.
Flair's CEO, Stephen Jones, disclosed that a substantial portion of their winter itinerary targets sun locations, marking a sharp rise from the previous year. Lynx Air, despite its recent inception in April 2022, is charting a similar course. Lynx's CEO, Merren McArthur, emphasized their sun strategy, stating, "We're really investing strongly in this market, because it's underserved by low-cost carriers."
A primary sun destination such as Cancun, could see a blood bath this winter with five Canadian carriers flooding the destination - Flair, Air Canada, WestJet, Transat, Sunwing, and Canada Jetlines.
However, while these new entrants carve their niche, Air Canada and WestJet are looking to secure their positions by adding capacity. Both plan to boost their sun destination flights, Air Canada aims to operate 8% more flights to the sun than in 2019 and WestJet plans a 15% capacity surge next year.
Competition with Benefits
John Gradek from McGill University notes, "The Canadian market this fall on travel, you'll get a hell of a deal."
Eric Tanner, VP of Network Planning and Revenue Management, made a strong case for the strategy of ultra-low fares in a virtual Pink Couch with Open Jaw President Nina Slawek. During the interview, he said, "People are sick of paying a thousand dollars to take it to a flight to Toronto."
"It's high time that airlines who make fat profits by price gouging start facing competition. And I think it's really important for consumers," he added.
Flair Airlines recently announced it carried 514,325 customers in AUG 2023 — the highest in its history — matched by a record sold load factor of 93 percent.
The P Word: Pilot Shortages
As airlines strategize, they face internal challenges. Lynx's Merren McArthur points out the competition for pilot resources, emphasizing the industry's growth pace. Echoing this, a memo from Air Canada's executive VP, Mark Galardo, highlighted an industry-wide pilot shortage affecting their network.
Galardo told staff last month that "an industry-wide shortage of pilots … has had a prolonged impact on our regional network."
Flair Airlines recently removed flights connecting Vancouver International Airport (YVR) and Montréal-Pierre Elliott Trudeau International Airport (YUL), with its final flight departing from YVR on 27OCT.
A spokesperson for the airline told V.I.A. that it is "taking a pause" on the popular route due to a change in market conditions and expects to resume service in the summer of 2024.
The predominant question in all the reporting is who will survive.
“I’d say it’s a highly competitive market,” said chief executive Michael Deluce, who also expressed doubt about how long the system can hold.
“I think the current set of competitors is not a sustainable long-term proposition. I’m not going to highlight which carriers I think will not be here 12 or 24 months from now,” he added.
