The Competition Bureau of Canada is conducting a review of the country’s airline sector due to concerns about competition. The industry is dominated by Air Canada and WestJet, accounting for almost 95% of industry revenue. Complaints from passengers have increased in recent years, and new entrants to the market appear to face challenges. Despite some attempts to break into the market, such as Lynx Air in 2022, other than Porter Airlines, there are few significant players. The study aims to identify factors impeding competition and make recommendations to improve competition in the sector.
The investigation will allow the agency to understand the root causes of challenges within the airline industry. The study will lead to recommendations to various levels of government to enhance competition. An initial public consultation is ongoing, and the study will officially begin once finalized terms of reference are published. Although the agency is not investigating specific allegations, it could take action if any evidence of contraventions of the Competition Act is uncovered. The Commissioner of Competition emphasizes that more competition will lead to lower prices, better services, and improved productivity in the industry.
Both WestJet and Air Canada have responded to the developments. WestJet has put forth recommendations to improve affordability and competition, emphasizing their commitment to meeting the diverse needs of their guests. Air Canada is reviewing the terms of reference for the study and highlighted a recent competition presentation made to a Canadian parliamentary committee. The Competition Bureau, an independent law enforcement agency, plans to publish its findings in June 2025. The study aims to provide insights into enhancing competition within the Canadian airline sector.
In addition to the review of the airline sector, the Skift Travel 200 (ST200) monitors the financial performance of nearly 200 travel companies globally, including airlines. The index includes network carriers, low-cost carriers, and related companies trading on public markets. The performance of airline sector stocks within the ST200 can provide insights into the overall health and performance of the travel industry. By combining the financial performance of these companies into a single number, the ST200 offers a comprehensive view of the travel sector’s financial well-being.
The study conducted by the Competition Bureau of Canada is crucial for identifying barriers to competition within the airline industry. The dominance of Air Canada and WestJet in the market raises concerns about consumer choice and pricing. By understanding the challenges faced by new entrants and smaller players like Porter Airlines, the study aims to make recommendations that will lead to improved competition, lower prices, and better services for passengers. The responses from WestJet and Air Canada indicate their willingness to engage in discussions on enhancing competition within the sector. Ultimately, the findings of the study will shape the future of the Canadian airline industry.
