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Lower airfares on the way due to CanadaB次元官网网址檚 more crowded skies

New airline carriers are shaking up the status quo in some of CanadaB次元官网网址檚 busiest routes
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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

Passengers arenB次元官网网址檛 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 B次元官网网址 and cheaper fares on the busiest routes.

B次元官网网址淲henever youB次元官网网址檝e got players trying to establish themselves in these markets, it is a boon for consumers,B次元官网网址 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 B次元官网网址 up to six now versus as few as two several years ago B次元官网网址 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-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.

B次元官网网址淲eB次元官网网址檙e really investing strongly in this market, because itB次元官网网址檚 underserved by low-cost carriers,B次元官网网址 Lynx CEO Merren McArthur said of sun destinations B次元官网网址 particularly flights out of TorontoB次元官网网址檚 Pearson airport.

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

B次元官网网址淭hey will not shy away from a gun fight,B次元官网网址 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.

B次元官网网址淚B次元官网网址檇 say itB次元官网网址檚 a highly competitive market,B次元官网网址 said chief executive Michael Deluce, who also expressed doubt about how long the system can hold.

B次元官网网址淚 think the current set of competitors is not a sustainable long-term proposition. IB次元官网网址檓 not going to highlight which carriers I think will not be here 12 or 24 months from now,B次元官网网址 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.

B次元官网网址淭he Canadian market this fall on travel, youB次元官网网址檒l get a hell of a deal,B次元官网网址 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 ChinaB次元官网网址檚 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 B次元官网网址 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.

B次元官网网址淏ottom line: play where you can win,B次元官网网址 said Robert Kokonis, president of consulting firm AirTrav Inc.

That lack of regional competition B次元官网网址 though budget airlines have filled a handful of those gaps B次元官网网址 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.

B次元官网网址淣o. 1 would have to be the pilot resourcing. EverybodyB次元官网网址檚 ramping up very quickly and everyoneB次元官网网址檚 competing for the same pool of pilot candidates,B次元官网网址 said LynxB次元官网网址檚 Merren McArthur.

In a memo viewed by The Canadian Press, Air Canada executive vice-president Mark Galardo told staff last month that B次元官网网址渁n industry-wide shortage of pilots B次元官网网址 has had a prolonged impact on our regional network,B次元官网网址 with ripple effects on mainline operations.

He also cited a need to B次元官网网址渄efend our position against increased competition from new entrants, existing competitors making strategic moves and, in some cases, even other flag carriersB次元官网网址 at Air CanadaB次元官网网址檚 three hubs of Toronto, Montreal and Vancouver.

Meanwhile, jet fuel prices are climbing back up to six-month highs, B次元官网网址渋mplying this cost may pressure margins,B次元官网网址 said TD Cowen analyst Helane Becker B次元官网网址 all as pilot unions demand, or already secured, higher wages at Air Canada and WestJet, respectively.

Ultimately, CanadiansB次元官网网址 urge to travel remains the key driver, one resting heavily on economic concerns as more and more of consumersB次元官网网址 cash goes to service their debt. Whether planes stay full in the next 12 months remains to be seen.

B次元官网网址淚 think itB次元官网网址檚 an open question whether weB次元官网网址檒l be able to see the same amount of pent-up demand that weB次元官网网址檝e seen over the last year,B次元官网网址 Dee said.

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