Canadians have long suspected the cost of airline tickets to their favourite travel destinations have been sky-high since the industry recovered from the pandemic.But now the Competition Bureau is looking into what many already know with a market study into the country’s domestic air passenger service.In terms of reference published earlier this week, the bureau says it will look at indications "domestic airfares in Canada may be relatively high," and that "average airfares remain above pre-pandemic level."It will also examine the relative ‘duopoly’ of WestJet and Air Canada in the wake of high-profile bankruptcies of smaller carriers. The country’s two main airlines account for about 80% of Canada’s domestic air capacity.The study hopes to answer three concerns: the state of competition; government policies to support new entrants; and consumer protection..It comes amid growing dissatisfaction with the airline industry in general. In April, the Canadian Transportation Agency said it had a backlog of about 71,000 unresolved complaints."I think part of the reasons that fed into our decision to launch this market study include the fact that this is a concentrated sector," said Anthony Durocher, deputy commissioner of the bureau's competition promotion branch."Recent incidents such as the bankruptcy of Lynx Air [have] clearly indicated it may be more difficult for smaller airlines to operate in the Canadian marketplace."But already, WestJet has bristled back and compared it to government attempts to regulate everything from "affordable" housing to the price of groceries, which has yet to bear fruit — so to speak.“The terms of reference for the study fundamentally ignore many of the key barriers that are unique to our country and are driving up the cost for Canada’s air travellers and reducing competition in Canada’s air travel market,” wrote CEO Andrew Gibbons in its submission to the board.“The reality is that Canada has a highly uncompetitive tax and regulatory environment which is stifling competition and increasing costs to Canadians.”
Canadians have long suspected the cost of airline tickets to their favourite travel destinations have been sky-high since the industry recovered from the pandemic.But now the Competition Bureau is looking into what many already know with a market study into the country’s domestic air passenger service.In terms of reference published earlier this week, the bureau says it will look at indications "domestic airfares in Canada may be relatively high," and that "average airfares remain above pre-pandemic level."It will also examine the relative ‘duopoly’ of WestJet and Air Canada in the wake of high-profile bankruptcies of smaller carriers. The country’s two main airlines account for about 80% of Canada’s domestic air capacity.The study hopes to answer three concerns: the state of competition; government policies to support new entrants; and consumer protection..It comes amid growing dissatisfaction with the airline industry in general. In April, the Canadian Transportation Agency said it had a backlog of about 71,000 unresolved complaints."I think part of the reasons that fed into our decision to launch this market study include the fact that this is a concentrated sector," said Anthony Durocher, deputy commissioner of the bureau's competition promotion branch."Recent incidents such as the bankruptcy of Lynx Air [have] clearly indicated it may be more difficult for smaller airlines to operate in the Canadian marketplace."But already, WestJet has bristled back and compared it to government attempts to regulate everything from "affordable" housing to the price of groceries, which has yet to bear fruit — so to speak.“The terms of reference for the study fundamentally ignore many of the key barriers that are unique to our country and are driving up the cost for Canada’s air travellers and reducing competition in Canada’s air travel market,” wrote CEO Andrew Gibbons in its submission to the board.“The reality is that Canada has a highly uncompetitive tax and regulatory environment which is stifling competition and increasing costs to Canadians.”
