Canada’s airline market on the path to consolidation. Will prices change?
Global News
After entertaining new entrants for several years, Canada's airline market is on the path to consolidation, raising the likelihood of higher fares and fewer flight options.
After entertaining new entrants for several years, Canada’s airline market is once again on the path to consolidation, raising the likelihood of higher fares and fewer flight options.
Since May, newer low-cost carriers Swoop and Lynx Air have disappeared from the skies and WestJet has scooped up Sunwing Airlines.
The latter two made up 37 per cent of seat capacity on direct flights to sun destinations and 72 per cent from Western Canada last year, according to an October report from the Competition Bureau. It said eliminating the rivalry between WestJet and Sunwing would likely suppress competition around the sale of vacation packages.
“We’ve lost 40 per cent of the players in the space of the last 12 months,” said John Gradek, a lecturer at McGill University’s aviation management program.
“The question is, are we done?”
The shrinking airline tally could mean less service and higher prices, particularly in the West and smaller markets across the country.
“The fewer competitive entities you have in Canada, the less pressure you have to be price-competitive,” Gradek said.
Air Canada and WestJet have strengthened their grip on the domestic market over the past year, even as rival Porter Airlines rapidly expands in a bid to become the country’s third major airline.