The Competition Bureau has released its “Cleared for take-off: Elevating airline competition” market study report, which focuses on bolstering competition in the country’s domestic airline industry.
The report revealed that 56 to 78 percent of domestic passenger traffic in major Canadian airports comes through Air Canada and Westjet, indicating high concentration in the domestic market despite new airlines’ recent entry and expansion. New sources of competition remain weak.
Canadians indicated that international flights were typically cheaper than domestic flights. They also highlighted limited airline options and concerns about the quality of service.
The bureau determined that one new competitor flying a route between two cities reduces airfares by an average of 9 percent.
“With the right policy changes, governments can create the conditions for new airlines to grow and compete – and give Canadians access to more affordable, reliable options for flights. With this report, we have identified concrete actions that governments can take to achieve these goals,” competition commissioner Matthew Boswell said in a statement.
The report recommended that governments prioritize competition in Canada’s aviation policy, such as in airline merger and collaboration reviews. It also suggested that governments leverage global capital and experience, reducing foreign ownership barriers, and support northern and remote market access, customizing regulations to the northern context. Those residing in northern and remote communities require air service to obtain food, healthcare, social connections, and jobs.
The “Cleared for take-off: Elevating airline competition” is the inaugural market study under the Competition Bureau’s new information gathering powers for market studies. The study commenced on July 29, 2024.
Last year, the bureau gleaned court-ordered information from Air Canada and Westjet. It conducted field research in Iqaluit to directly observe air transportation concerns in northern and remote communities. It also obtained feedback from airlines, airports, travel and tourism companies, government organizations, consumer advocacy groups, labour representatives, corporate customers, industry experts, and the public.