More carriers and unprecedented expansion: Canada’s airline industry is flying high

More carriers and unprecedented expansion: Canada’s airline industry is flying high

TORONTO — As if travel’s restart wasn’t enough of a story in 2022, Canada’s airline industry took things up a notch this year with brand new carriers, big expansions and even news of a possible acquisition.

Canada Jetlines took off in 2022, after years of waiting, and to cheers from travel agents who can earn commission with the new carrier. Lynx Air got off the ground too. Flair Airlines expects to have 27 aircraft, and 28 cities (including seven in the U.S.), by summer 2023. Porter Airlines is making good on its own expansion plans, with new 2023 flights to Vancouver, Calgary and Edmonton all announced in recent days, and plenty more routes and destinations on the way, including more in the U.S. plus sun spots in Mexico and the Caribbean. Meanwhile Air Canada, Air Canada Rouge, WestJet, Swoop, Sunwing and Transat are all ramping up capacity too, as Canadians rediscover the joys of travel.

Meanwhile the WestJet Group’s proposed acquisition of Sunwing Vacations and Sunwing Airlines is winding its way through the regulatory process. Will approval come in 2023? Or will it founder like Air Canada’s proposed acquisition of Transat?

In a recent interview with Travelweek, aviation expert John Gradek predicted that the WestJet-Sunwing deal will get the go-ahead. “Even with this duplicity of routes and the potential for significant service rationalization, the Canadian government approved the Air Canada-Transat transaction. The WestJet-Sunwing transaction has a great deal less duplicity and frequency impact and, in my opinion, should easily pass Canadian government approval,” said Gradek.

As Canada’s leisure air market takes on more capacity than anyone ever thought possible, the country’s corporate travel market is picking up too.

For this year-end look at Canada’s airline industry, Travelweek connected with Patrick Doyle, Vice President & General Manager at American Express Global Business Travel, the world’s leading business-to-business travel platform. Doyle also sits on the boards of GBTA and ACTA.


Travelweek: What surprised you – good and bad – about how airlines handled travel’s restart in 2022?

Doyle: “Without a doubt, the pandemic had an unprecedented impact on travel. It was the first industry to shut down and among the last to reopen. In our sector, the airline industry has struggled the most with recovery, initially through low demand and now through logistical and staffing issues. While the swift pace was something we couldn’t have predicted in 2021, what’s been most impressive to witness is how the people on the frontlines of the airline industry have deftly navigated the immense challenges faced this year. I applaud them.”


Travelweek: What could the airlines have done differently?

Doyle: “The world’s carriers are emerging from one of the most challenging periods in their history, so there are bound to be difficult lessons learned. Airline and airport labor shortages were a significant factor in reduced capacity during 2022. Looking back, we can now say that staffing shortfalls could have been addressed sooner. As well, more transparent communications with customers may have mitigated some of the chaos; positioning difficulties that peaked this summer as a short term disruption actively being addressed.”


Travelweek: Do you think Canada can handle all the capacity that’s coming – overcapacity concerns?

Doyle: “The research in this year’s Air Monitor report shows that new carriers in Canada are adding significant capacity, leading Canada to recover an impressive 97% of 2019 ASM (available seat miles) levels in Q1 2023. However, with their largely domestic focus and low-cost models, these carriers may be unlikely to meet the needs of corporate travellers, which is the audience we at Amex GBT are laser focused on.”


Travelweek: How is business travel’s recovery coming along?

Doyle: “Early reports of the death of business travel were greatly exaggerated. In fact, the reality is quite the opposite. Our latest earnings show business travel continuing to recover and companies continuing to invest in travel. A survey of our top 125 customers in October reported that 95% expect their 2023 business travel spend to increase or stay flat to 2022. Seven in 10 decision makers we surveyed believe increased remote work will lead to more, not less, business travel in the future fuelling demand. Remote and hybrid work are making business travel the new centre of company culture.”


Travelweek: Amex GBT’s Air Monitor report forecasts airfares to keep climbing. Do you think the market forces will keep fares from getting too high? Or are the days of reasonably affordable airfares behind us for a while?

Doyle: “Forecasting is always difficult. Forecasting air prices – after two years of disruption and volatility – is even more of a challenge, one that is compounded by the uncertain outlook for the world economy. Given significant price increases in 2022, fare rises in the competitive North American air sector in 2023 are expected to be more moderate, 3.4% in business class and 2.9% economy, than those forecast for Europe and Asia Pacific.

“Some factors, such as the cost of fuel, are beyond the airline’s control and will continue to impact prices. Since March 2022, fuel surcharges on a roundtrip business class ticket from New York to London have increased by $500 to $1,700, for example.”


Travelweek: What’s key for the airline industry as we head into 2023?

Doyle: “Sustainability is no longer a nice-to-have and it’s important that we keep making inroads as an industry. According to many surveys, including our own, sustainability is becoming more important to both companies and travellers when booking their trips. Four in five respondents or 80% say their organization takes sustainability into account when planning meetings and events. Of those, over three quarters (76%) say that their organization has a defined sustainable meeting program strategy. This is encouraging news.

“Here at Amex GBT, we recognize the risks posed by climate change, wasted resources, and loss of biodiversity. We have committed to set science-based and net zero emissions targets, and we were the first global TMC to become carbon neutral for our own travel activities. For clients and partners, we’re scaling sustainable solutions, including carbon calculations and reporting, credible carbon credits to offset travel emissions, and sustainable aviation fuel (SAF) to decarbonize air travel. For me personally, this is one of the most exciting and rewarding advancements in our industry.”