The federal Competition Bureau says it’s going to look the domestic air travel industry in Canada, and it’s looking for input from Canadians as it prepares to study the market in the coming months.
The agency, which is tasked with enforcing competition law in Canada, said in a press release listing the reasons for its study that domestic airfare in Canada “appears to be relatively high” and that Canadians are filing more complaints about air travel recently.
The bureau also noted that domestic air travel is “concentrated” with only two major airlines — Westjet and Air Canada — and that new airlines seem to have difficulties joining the industry here.
“What we’re trying to do here is study how competition is working in the sector, really with a view to making recommendations to government,” said deputy commission Anthony Durocher.
“Why this matters is because we know that competition means lower prices, more choice, more innovation.”
Public invited to comment
The Competition Bureau has asked Canadians to weigh on the upcoming study’s terms of reference, essentially requesting public comment on the scope or potential limitations of the upcoming study.
The tentative, draft terms of reference mention that the bureau wants to answer questions, such as, “How can policymakers further support airline entry and expansion?” and, “How can policymakers further support consumers when shopping for airfares?”
The public has until June 17, 2023, to submit feedback, after which the bureau will finalize terms of reference and officially launch the market study, which is planned to be completed by summer 2025.
The report would make recommendations to government, but is not looking at any specific allegations of wrongdoing.
Airport costs too high: Flair Air
The Competition Bureau’s draft for the study includes questions around whether Canadians would be willing to use “secondary or more distant” airports, but industry players point out one factor is they believe airport costs or rents in this country are too high, which is being passed on to customers.
“When you look at the cost of operating to a Canadian airport, relative to one in the US [or Europe], the airport fees are much higher here,” said Garth Lund, chief commercial officer with Flair Airlines in Vancouver.
“The whole ecosystem in Canada is very expensive when it comes to aviation and airports are a big piece of that,” said Lund, whose airline positions itself as a low-cost carrier. He called fees like that a “main contributing factors to higher airfares.”
It’s a message echoed by Westjet CEO Alexis von Hoensbroech, who told CBC Radio’s The Calgary Eyeopener in an interview that “the government should actually stop collecting rent from airports” as one step toward addressing affordability.
However, in a post on X, formerly known as Twitter, federal Minister of Innovation, Science and Industry François-Philippe Champagne suggested that the Competition Bureau’s market study be “refined to focus on domestic passenger airline services rather than airport governance.”
The study’s terms of reference would have to be approved by the minister, and in draft form say they will not evaluate airport governance except where it relates to competition for Canadian passenger services.
Regulator using new powers
The market study, which was first announced May 9, is the bureau’s first since it gained new powers in December
“One of the important changes to our law, and it’s something we’ve advocated for for quite some time, was the ability to compel information rather than just companies providing it to us voluntarily,” said Durocher.
“Whether we’re going to do it for this first study, I think remains to be determined.”
He expects the Competition Bureau will make that decision after the market study officially launches in the coming months.
With discount airlines Swoop and Sunwing being absorbed into WestJet, some fear the reduced competition will mean higher overall airfares. WestJet’s CEO says it won’t.
Over the past 13 months, newer low-cost carriers Swoop and Lynx Air have disappeared from the skies and WestJet scooped up Sunwing Airlines, with the latter two making up 72 per cent of seat capacity from Western Canada last year, according to the bureau.
In a statement emailed to CBC News, Westjet said, “Air travel is essential to our country and we welcome interest from all groups,” with regard to this study.
Air Canada said it could not comment directly on today’s announcement, as they are reviewing the draft.
Source Agencies
