TORONTO — The Competition Bureau’s just-announced study of domestic air travel could be a step in the right direction.

Talking to Travelweek yesterday, following word that the bureau has launched the consultation process as the first phase of its market study of competition in domestic air passenger services in Canada – aviation industry expert John Gradek said, “we have to come back with a new way of running the business” of air travel in Canada.

“When airfare on the Toronto-North Bay route is double that on the Toronto-Vancouver route, that’s just wrong,” said Gradek. “You want to ask the airlines, do you want government intervention? Do you want to go back to the days of regulation? How do we create a saner environment?”

Gradek has long called for regulatory oversight on pricing in the domestic airline market, to make sure Canada’s newer carriers, often low-cost carriers and ultra low-cost carriers, can grow and flourish.

He notes that in the U.S., Secretary of Transportation Pete Buttigieg keeps a close eye on U.S. carriers, citing the US$140 million fine levied against Southwest Airlines for operational failures that saw more than 16,000 flights cancelled and left millions of passengers stranded during the busy Christmas holiday travel window in 2022. “If the customer is getting screwed, there are fines, and if you don’t shape up, he’ll fine you some more.”

He also points to Australia, where big carriers including Qantas and Virgin Australia focus more on international routes, leaving more domestic market share for smaller carriers.

Here in Canada, the Competition Bureau’s public consultation phase for the study is now open, and runs through June 17. For public feedback, interested parties can submit their comments by June 17 through a feedback form or by emailing airlinemarketstudy-etudemarcheaerien@cb-bc.gc.ca.

The bureau notes that …

• Canada’s domestic air travel market is concentrated with only two major airlines;
• Domestic airfare in Canada appears to be relatively high;
• Canadians have filed more complaints about air travel services in recent years; and
• New airlines appear to face challenges entering the Canadian market.

“The airline industry is important to Canadians and the Canadian economy. Since the Canadian population is spread out over vast distances, other modes of transportation may not be feasible replacements for air travel. More competition in the industry will mean lower prices, better services, and improved productivity,” said Matthew Boswell, Commissioner of Competition.

News of the bureau’s upcoming study first hit earlier this month.

“BRING SANITY BACK”: GRADEK

“In order to bring sanity back to Canada’s airline industry, we have to break up the duopoly and give entrepreneurs and third-party operators a chance to succeed, and make it so that they’re not constantly having to watch the rearview mirror” for larger competitors, said Gradek.

The problem for new carriers isn’t barriers to entry, he added. “It’s survival.”

He notes that last summer and into early fall, when Flair Airlines and Lynx Air were battling it out for high season summer travellers, fares on transcontinental routes like Toronto-Vancouver and Toronto-Calgary dropped as low as $99. “After a while Air Canada and WestJet took notice and lowered their fares too, and that took a lot of wind out of the sails” of the smaller carriers.

In February 2024 Lynx Air announced it was shutting down, after reported possible merger talks with Flair.

Gradek says the Competition Bureau has indicated that while its study will not lead with an investigation into predatory pricing, it will look into such cases if and when they come up.

The recommendations coming out of the study “should be interesting,” says Gradek.

“We have to come back with a new way of running this business,” he added.