For years, Canada has been heavily dominated by two carriers, now obviously Air Canada and WestJet, together with many much smaller operators. But there are now also (U)LCCs: Lynx Air, Flair, Canada Jetlines, and WestJet's Swoop. They're shaking things up and – most significantly – have many aircraft on order.

Inevitably, the two incumbents – with clear vested interests – are highly skeptical and wary and spoke at Routes World of the inevitable market shakeup. They would say this as they'd benefit from less competition and the ability to increase prices where they compete to have stronger yields and to achieve better performance.

What does Air Canada say?

Speaking at Routes World, Air Canada's Alexandre Lefèvre, Managing Director of Network Planning, said:

"The market in Canada has changed a lot – there are many new players, all coming with big ambitions and many planes. Competition is very fierce, with everyone trying to find their place. Next year will be exciting."

Lefèvre said Lynx Air and Flair each have around 50 737 MAXs on order along with 15+ A320s with Canada Jetlines. WestJet also has 60+ new aircraft coming, although it's unclear how many are for growth rather than replacement. He added:

"By 2027-2028, a huge amount of new aircraft will arrive. Yes, the new entrants are well funded, but they won't sustain more than one winter.

Canada is a more mature market... you can't really grow each market like you can in Asia and Latin America. People already travel quite a lot. It's highly unsustainable and there will definitely be more consolidation in Canada."

Canada Jetlines A320
Photo: Canada Jetlines

What does WestJet say?

It isn't surprising that WestJet management believes the same. According to Frank Satusky, Director of Commercial Strategy:

"There are six or seven Canadian carriers with pretty big growth ambitions... nearly 200 aircraft coming in a few short years. It took us nearly thirty years to achieve a similar number [WestJet, WestJet Encore, and Swoop combined have around 169 aircraft]."

Analyzing schedules information from OAG for domestic Canada this month shows there are 4.9 million seats for sale, down by 12% over October 2019. That drop is despite more operators, although the nature of the carriers has changed. Satusky said:

"We're having a bit of a struggle getting the yield up... in particular in domestic markets, which is from two factors. One is the significant amount of ULCC capacity now, the other that business travel is definitely not where it once was."

Like Air Canada, Satusky believes that the higher competition will not last. "We will probably see consolidation next year."

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Toronto-Calgary

Air Canada's Lefèvre pointed to this 1,675-mile (2,696km) route as a good illustration of the greater competition resulting in a less sustainable domestic market. "It has seen a lot of growth and now has six airlines on it."

It's true: it does. There is Air Canada, WestJet, Flair, Lynx Air, Air Transat, and Canada Jetlines. Between them, the market has 258,000 roundtrip seats for sale this month, up by 10% over October 2019, when there were 'only' four operators.

As winter approaches, time will tell what happens – both to this route and Canada's airlines generally.

What do you make of Canada's changing competitive landscape? Let us know in the comments.