What Happened To Canadian Airlines?

Today, Air Canada has a very conspicuous presence as the country’s flag carrier. However, there was also once an airline in Canada that was part of the OneWorld Alliance. In fact, the carrier in question was one of the alliance’s founding members. Indeed, before WestJet established itself as Air Canada’s major domestic rival, competition came from Canadian Airlines. However, what happened to this carrier?

Canadian Airlines ATR
Canadian Airlines operated for just 14 years. Photo: Getty Images

Where it all began

Following a series of acquisitions and mergers, Canadian Airlines was formed on March 27th, 1987. The airlines in question that were amalgamated to form Canadian were:

  • Pacific Western
  • Canadian Pacific (CP Air)
  • Eastern Provincial Airways
  • Nordair

Two years later, in 1989, it went on to acquire Wardair. This gave the airline access to new routes serving, among other destinations, the UK and Europe. Its headquarters were in Calgary, Alberta, as was one of its hubs (Calgary International, YYC). Its other major hubs were in the three largest Canadian cities:

  • Toronto Pearson, Ontario (YYZ)
  • Montreal Trudeau, Quebec (YUL)
  • Vancouver International, British Columbia (YVR)

As recognized by the Canadian Internet Handbook, Canadian Airlines was also the world’s first airline to have its own website. The site was also the first to possess transactional capabilities and fare information, as well as flight arrival and departure times.

An extensive network

Canadian was also a founding member of the oneworld airline alliance, along with Australian flag carrier Qantas, American Airlines, and British Airways. Despite its relatively short existence, the airline quickly built up a very extensive network of destinations worldwide. At its peak, Canadian was serving destinations across five continents. At the time, it had the distinction of flying to more places in Asia, more often than any other Canadian carrier.

Canadian Airlines 747 Bangkok
Canadian Airlines had the country’s largest market share in terms of Asian destinations. Photo: Getty Images

A diverse fleet

The diversity of Canadian’s destinations was also matched by that of its fleet. According to Planespotters.net, the airline operated a total of 147 aircraft during its 14 years of operation. These were as follows:

  • Airbus A310 x12
  • Airbus A320 x13
  • Boeing 737 x76
  • Boeing 747 x4
  • Boeing 767 x25
  • McDonnell Douglas DC-10 x17

Canadian Regional Airlines also operated the following turboprop aircraft on the airline’s behalf:

  • ATR 42 x7
  • De Havilland Dash 8-100 x13
  • De Havilland Dash 8-300 x15

Financial difficulties and acquisition

Unfortunately, Canadian Airlines was hit hard by a slump in the airline industry in 1991. In addition to debt restructuring, the airline was further aided by an injection of cash from the American Airlines Group.

Seven years later, the airline was also feeling the effects of an Asian economic downturn in 1998 and saw its air traffic decrease. This particularly affected the transpacific market, where it was focusing much of its energy. It would also be reasonable to assume that the start and growth of low-cost carrier WestJet also reduced the airline’s market share. WestJet started up in 1994.

Westjet boing 787-800
The foundation of WestJet in 1994 is likely to have been a factor in the demise of Canadian Airlines. Photo: Getty Images

Canadian’s poor financial continued for the remainder of the 20th century, before flag carrier Air Canada finally acquired the struggling carrier in 2000. When the merger took place, Canadian Airlines had over 40% of the domestic passenger market share in Canada. Canadian officially ceased operations on January 1st, 2001.

There were other proposals for the airline’s survival, but they were all rejected. This even included a competing bid led by American Airlines to purchase Canadian. American Airlines had already maxed out its government-imposed limit of foreign ownership set at the time as 25%. That limit has since been increased.

Air Canada Boeing 787-9 Dreamliner C-FVND
Air Canada acquired Canadian Airlines in 2000. Photo: Vincenzo Pace | JFKJets.com

The Canadian airline market today

Today, Canada’s two largest airlines are Air Canada and WestJet respectively. These two airlines now also have their own low-cost subsidiaries, namely Air Canada Rouge and Swoop. Air Transat has a very diverse network but remains largely a charter and leisure airline. Major private investment firm Onex acquired WestJet for US$3.7 billion in May 2019.

Air Transat A310 Cuba
Air Transat connects Canadian cities with a variety of exotic charter destinations. Photo: Getty Images

The Canadian airline industry now looks rather different from when Canadian Airlines was founded 33 years ago in 1987. Similarly, it will continue to evolve for the next 33 years, and indeed beyond. In any case, it looks as if Air Canada will continue to be the market’s dominant force for the time being. Nonetheless, the advent of smaller, low-cost airlines such as WestJet (and their new owners/investors) should help to keep the sector competitive.

What are your thoughts? Let us know what you think in the comment section.