Can more competition drive down Canadian airfares? Watchdog launches probe

Canada’s title watchdog is scanning nan skies for ways to amended nan country’s aerial recreation industry, studying whether caller policies could pull much airlines to nan assemblage and little prices for passengers.

The Competition Bureau connected Monday launched its probe into nan authorities of title successful Canada’s airline industry, which it noted successful nan position of its study is already heavy concentrated betwixt 2 awesome players, Air Canada and WestJet.

Together, nan 2 airlines magnitude for 80 per cent of capacity successful nan Canadians hose industry, arsenic measured by nan sector’s seat-kilometres metric.

With those airlines scaling backmost their operations regionally — WestJet focusing efforts successful nan westbound and Air Canada to nan eastbound — and upstart airlines like Lynx Air collapsing aliases struggling aft return off, nan title watchdog is looking astatine whether Canada’s aviation argumentation is lacking erstwhile it comes to introducing and supporting caller entrants.

The study will analyse caller dynamics successful Canadian aviation specified arsenic nan preamble of ultra-low costs carriers and user request for nonstop flights aliases usage of secondary airports, arsenic examples, arsenic it looks for gaps successful nan argumentation landscape.

The probe will reply questions specified as, “Should authorities action beforehand much title from world players connected home routes?”

The Competition Bureau notes location is grounds that home airfares are comparatively precocious successful Canada and stay supra pre-pandemic levels.

The study will return a look astatine whether consumers person capable accusation to make informed choices astir their fares and different ways that policymakers could put much competitory options connected nan table.

The introductory study suggests that nan study whitethorn thief nan national authorities ace down connected fees related to spot action aliases checking baggage that are levied astatine consumers.

“Supporting title successful this manufacture will thief trim prices for consumers, amended value of work and moving conditions, summation productivity, and boost innovation,” nan study’s position say.

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The study does not pre-suppose immoderate wrongdoing connected nan portion of airlines, but nan Competition commissioner will analyse if nan probe finds grounds that nan Competition Act has been violated.

The Competition Bureau intends to people its findings by June 30, 2025, but notes that nan schedule whitethorn change.

Competition crossed various industries successful Canada has been a basking taxable arsenic of late. The Liberal authorities granted caller powers to nan Competition Bureau this past fall, including giving nan watchdog powerfulness to compel documents from corporations arsenic portion of its marketplace studies.

Last year, nan Competition Bureau published a study arguing for much title successful Canada’s market sector to support prices successful check. The watchdog is besides specifically investigating nan genitor companies of Loblaw and Sobeys for alleged anti-competitive behaviour.

Competitive forces person been connected nan diminution successful Canada astatine nan aforesaid clip arsenic profits and value markups are connected nan rise, a study from nan Competition Bureau released precocious past year found.