More airline competition sets stage for showdown
Challengers crowd domestic, sun belt markets
IT’S A HIGHLY COMPETITIVE MARKET. 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.
— MICHAEL DELUCE, PORTER AIRLINES
MONTREAL • Passengers aren’t the only ones feeling cramped these days.
Though Canadian flights have long been dominated by Air Canada and Westjet Airlines Ltd., 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.
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-lowcost Flair this winter will be to the U.S. Sun Belt, Mexico and the Caribbean compared with 40 per cent last winter, chief executive Stephen Jones said 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.
“We’re really investing strongly in this market, because it’s underserved by low-cost carriers,” Lynx chief executive Merren Mcarthur said of sun destinations — particularly flights out of Toronto’s Pearson International Airport.
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 gunfight,” 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.”
Meanwhile, Air Canada aims to operate eight per cent more flights to sunsplashed spots this winter than in 2019. Westjet plans to hit 15 per cent more capacity 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 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.