Canada’s Airline Industry in Need of Serious Reform, Experts Say

An Air Canada Airbus A220 is seen at the Montréal-Trudeau International Airport (YUL), in Montreal, Quebec, on Nov. 23, 2022. Daniel Slim/AFP via Getty Images

The aviation industry in Canada is still feeling the impact of the COVID-19 pandemic and is in need of real reform, experts say.

“It really is an integrative process that has to be looked at,” said John Gradek, lecturer and coordinator of the aviation management program at McGill University.

“All the players have to agree to want to play together. Right now, they’re not playing together. They’re not playing on the same team, and they’re all trying to maximize their own value for all organizations, and it’s showing very, very clearly to me, at least, that the overall system isn’t working very well.”

Mr. Gradek made the comments to The Epoch Times after Westjet announced it would be canceling flights from Toronto to Montreal for the winter. The route is expected to return in April, but he said it was a sign of an industry trying to maximize revenues without consideration for customer service.

“They’re doing it for the benefit of really strategically positioning themselves as a carrier of Western Canada, and to basically offer more and more nonstop direct services,” he said.

Industry in Tailspin?

A recent report by Deloitte, “Avoiding a Tailspin," notes the industry is still recovering from the COVID-19 pandemic, saying it could take years.

“It may take up to four to five years for air traffic in North America to return to its pre-pandemic levels,” the report said.

Backing Mr. Gradek’s position, Deloitte says that government and industry need to work together on the recovery. It cites some ways that collaboration can take place, including:

• Introducing policies that allow for private investment.
• Reevaluating the National Airport Policy to consider models that work for all sizes of airports.
• Rethinking aviation business models.

Airports and airlines could also consider new sources of income, including car rentals, vacation travel, and ridesharing, the report said.

“The aviation industry and Canada’s economy can’t afford a recovery that takes a decade or more,” the report said. “Government and industry need to reimagine their partnership and collaborate more closely than ever before.”

The report calls for a change to the current way of doing business in the country’s aviation industry.

“Now is the time for innovative ideas and new approaches that will enable aviation to rebound better, stronger, and more sustainable and competitive than ever before.”

While Westjet, Flair, and Scoop Airlines did not respond to The Epoch Times by publication, Air Canada said it is constantly reviewing its business model.

“The aviation business is continually evolving as new competition arises, the economy and markets change, or as new opportunities arise. For this reason, a successful airline must continually refine its business model,” an Air Canada spokesperson said in an email to The Epoch Times.

“To give you an example, during the pandemic the demand for air cargo delivery increased significantly and Air Canada moved to capture more of this business, including acquiring freighters.”

The spokesperson also said that when business travel declined during the pandemic and they saw a demand for leisure travel increase, they adjusted services.

“As people seized the opportunity to escape COVID lockdowns and travel restrictions, we altered our network and services in response, adding more leisure destinations and family-friendly amenities to our product offering.”

Airport Funding Challenges

Mr. Gradek said he felt a significant part of the problem was the funding model for airports. “The airports are woefully, woefully underfunded,” he said.

“Airports really need some sort of revisiting in terms of the governance and the financial governance and the operational governance,“ he said. ”I think the COVID has sunk these airports into financial ruin.”

Mr. Gradek said the problem was particularly acute at some of the larger airports in Canada.

“Airports like Toronto Pearson, Trudeau Montreal, to a lesser degree Vancouver, but Calgary as well, are all in a situation where they need billions of dollars basically to improve or just catch up on the infrastructure investment that they need, plus also grow the facility to handle increased demand that is out there.”

He said he believed that private investment in airports was a possible model but would require policy changes.

“They can’t invest in Canada because of the government structure that we have in airports being nonprofit and not being able to attract individual or private investors.”

If more investment is not made into airports, Mr. Gradek believes travellers will be the ones to feel it the most.

“As demand continues to grow for getting in airports, we’re going to be stuck with less level of service at the airport because the airports are not going to be able to handle the additional volume of passengers,” he said.

Need for New Business Model

Mr. Gradek said the business model that worked for airlines pre-COVID-19 no longer works.

“The Canadian government basically said that if you’re going to be using the airport system, you pay for the airport system,” he explained. “That was the mindset and it was okay for a while because it constrained growth in aviation.”

But COVID-19 changed everything, he said. “Since COVID, the model has tanked. There was no government support for airports or very little support for airports.”

He said that left airports on their own to pay for maintenance and upgrades. “It doesn’t fix the root cause of the problem,” Mr. Gradek said.

“They’ve overloaded the system, and that overloading the aviation system basically causes airlines to have delays. The government response has been, or it seems to be, let’s try to put some pressure on the airlines through financial costs, compensation, or administrative monetary penalties to put them to kind of change their behavior.”

He said the airlines have not responded well to that tactic. They “continue to have too many legs in the air, overtaxing the airport system and the air navigation systems.”

The Canadian Press contributed to this report.