Why is it so expensive to fly in Canada?
Featured / September 30, 2016
Answer: it’s really, really big
Flights in Canada are known to cost a small fortune as compared to other countries. One of the main reasons for this is that we only have two major domestic airlines: Air Canada and Westjet.
The level of competition between airlines and airfare doesn’t exist here like it does in the U.S. or Europe. Air Canada and Westjet are less inclined to lower their prices since they are basically just competing against each other. Some suggest that if we had more airline competition, we would see a change in airfare, and that is entirely plausible.
While it may be true, we face a different kind of travel dilemma here as well—our population is small and our landmass is huge. With more land to cover, more time and resources are used by airlines, and prices naturally go up.
But why is it that a flight to somewhere like Hawaii or Mexico can be cheaper than a flight to Toronto or Montreal? It all goes back to supply and demand. The demand is high but the supply is low in comparison.
Many Canadians have looked into discount airlines, but a great number of them have shut down their operations. According to a CTV News report, “Over the past fifteen years, there have been at least five discount airlines that have folded in Canada, unable to overcome challenges of a country with a relatively small population and large geography.”
It also comes as no surprise that our airports have some of the highest landing fees in the world. We have a federal airport system, which means that airports pay ground lease or rent to the Canadian government. A study conducted by the Montreal Economic Institute states that “airports should be privatized to end the rent payments,” since these rent payments account for a lot of the airports’ overhead, which could also help lower the cost of flying in the country.
In 1994, the Canadian government introduced the National Airports Policy, which has sparked controversy due to climbing airport prices and inefficient airport infrastructures. Unlike our airport system, every commercial airport in the U.S., except one, is owned by a public entity. This has allowed the airports to be landlords and the airports’ charges are assessed to the various businesses at the airports.
According to another CTV News report, “Air Canada executives told a Senate investigation in 2012 that, per passenger, fees at airports south of the border are 230 per cent lower than at the Canadian airports they compete with.”
So a lower number of paying customers travelling greater distances than just about anywhere else in the world has kept Canadian airfare prices skyrocketing. In addition, both a lack of necessary competition between airlines and the federalization of Canadian airports means that the prices won’t be coming down any time soon.