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You are here: Home / news / Lower airfares on the way due to Canada’s more crowded skies

Though Canadian flights have long been dominated by Air Canada and WestJet, the emergence of newer carriers including Flair Airlines and Lynx Air has shaken up the sector, injecting fresh competition to a once-complacent market. A WestJet Airlines Boeing 737 Max aircraft taxis to a gate after arriving at Vancouver International Airport in Richmond, B.C., Thursday, Jan. 21, 2021. THE CANADIAN PRESS/Darryl Dyck

Lower airfares on the way due to Canada’s more crowded skies

September 11, 2023 //  by The Canadian Press

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Passengers aren’t the only ones feeling cramped these days.

Though Canadian flights have long been dominated by Air Canada and WestJet, the emergence of newer carriers including Flair Airlines and Lynx Air has shaken up the sector, injecting fresh competition to a once-complacent market.

Most airlines are setting plans in motion to ramp up growth over the next year, adding more planes to an already crowded field — and cheaper fares on the busiest routes.

“Whenever you’ve got players trying to establish themselves in these markets, it is a boon for consumers,” said former Air Canada chief operating officer Duncan Dee.

Key domestic arteries such as Toronto-Vancouver, Vancouver-Calgary and Montreal-Toronto host more airlines than ever — up to six now versus as few as two several years ago — with fares dragged down by a pair of budget carriers.

READ MORE: What should I do when my luggage is lost: WCT Travel Guide

The cost of a domestic round-trip plane ticket fell to $289 on average this fall, a drop of 24 per cent from 2019 levels and 11 per cent from a year ago, according to travel booking app Hopper Inc.

The hub-to-hub rivalries within Canada come ahead of a battle over routes running from big cities to sun destinations this winter.

More than three-quarters of the trips by ultra-low-cost Flair this winter will be to the U.S. Sun Belt, Mexico and the Caribbean compared with 40 per cent last winter, CEO Stephen Jones said in an interview last month. It plans to grow its fleet by nearly a quarter to 26 planes next year.

Lynx, a no-frills airline that launched its maiden voyage in April 2022, aims to expand to 17 aircraft from nine at the moment. Its newest route flies between Toronto and Los Angeles for as low as $129 one way, tax included. The cheapest Air Canada ticket on the same route and dates was $490.

READ MORE: Tips for saving money on travel: The WCT Travel Guide

“We’re really investing strongly in this market, because it’s underserved by low-cost carriers,” Lynx CEO Merren McArthur said of sun destinations — particularly flights out of Toronto’s Pearson airport.

Meanwhile, Porter Airlines has bought 50 132-seat Embraer E195s, hoping to grow its fleet to 79 by 2025 from 46 currently.

“They will not shy away from a gun fight,” John Gradek, who teaches aviation management at McGill University, said of Porter.

The 17-year-old carrier joined the five other airlines plying the skies between Toronto and Vancouver in February. It also plans to launch service between Toronto and Orlando, Fla., in November, going up against an equal number of rivals.

“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.

Meanwhile, Air Canada aims to operate eight per cent more flights to sun-splashed spots this winter than in 2019. WestJet plans to hit 15 per cent more capacity overall next year than last.

More competition amounts to lower fares, particularly if demand drops off at a time when consumer spending is slowing.

“The Canadian market this fall on travel, you’ll get a hell of a deal,” Gradek said.

Outside of Mexico and the Caribbean, supply for international trips still falls short of demand, pushing fares ever higher.

The price of round-trip flights this fall rose 22 per cent for Europe, 16 per cent for South America and 32 per cent for Africa and the Middle East compared to 2019, according to Hopper.

It shot up 45 per cent for Australia and a whopping 121 per cent for Asia, with flights between China and Canada numbering 10 per week versus 100 per week in 2019, according to Transport Canada.

The plunge is due largely to China’s tight restrictions on tour group visits to Canada and a Russian airspace ban that forces Canadian carriers to take a longer route to Asia, tacking significant fuel and labour costs on to diplomatic tensions.

Back in Canada, regional fares are also on the rise apart from the biggest routes as the two dominant players retrench around their old hubs.

Over the past year, Calgary-based WestJet cut routes in Ontario, Quebec and Atlantic Canada to refocus on the West. It has also cut flights on some more heavily travelled corridors, including roughly 80 per cent of its trips between Toronto and Montreal compared to 2019 levels, according to aviation data firm Cirium.

Montreal-based Air Canada has mirrored this move, remaining in Central and Eastern Canada while scaling back in the West — it axed six long-haul routes out of Calgary last month. It also scrapped 26 regional routes east of Winnipeg in June 2020, with only a handful resuming since.

“Bottom line: play where you can win,” said Robert Kokonis, president of consulting firm AirTrav Inc.

That lack of regional competition — though budget airlines have filled a handful of those gaps — means pricier fares on most smaller domestic routes, according to an analysis of Cirium data earlier this year.

A tight labour market is limiting growth.

“No. 1 would have to be the pilot resourcing. Everybody’s ramping up very quickly and everyone’s competing for the same pool of pilot candidates,” said Lynx’s Merren McArthur.

In a memo viewed by The Canadian Press, Air Canada executive vice-president Mark Galardo told staff last month that “an industry-wide shortage of pilots … has had a prolonged impact on our regional network,” with ripple effects on mainline operations.

He also cited a need to “defend our position against increased competition from new entrants, existing competitors making strategic moves and, in some cases, even other flag carriers” at Air Canada’s three hubs of Toronto, Montreal and Vancouver.

Meanwhile, jet fuel prices are climbing back up to six-month highs, “implying this cost may pressure margins,” said TD Cowen analyst Helane Becker — all as pilot unions demand, or already secured, higher wages at Air Canada and WestJet, respectively.

Ultimately, Canadians’ urge to travel remains the key driver, one resting heavily on economic concerns as more and more of consumers’ cash goes to service their debt. Whether planes stay full in the next 12 months remains to be seen.

“I think it’s an open question whether we’ll be able to see the same amount of pent-up demand that we’ve seen over the last year,” Dee said.

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Category: news, TravelTag: Air Travel, Canada

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