• Wed. Oct 5th, 2022

Upcoming changes to the Canadian airline industry could lead to even more disruption

ByKimberly A. Brochu

Jul 27, 2022

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THE CONVERSATION

This article originally appeared on The Conversation, an independent, nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

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Author: John Gradek, Lecturer and Program Coordinator, Supply Chain, Logistics and Operations Management, McGill University

The state of global aviation has been a mess in recent months as pandemic-related travel restrictions have eased and the resulting demand for flights has put tremendous pressure on airlines and airports. For Canadian travelers, the situation could actually get worse after the summer travel season.

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There are a number of reasons for the current chaos in the airline industry in North America and Europe – primarily related to staffing shortages at airlines and airports.

When travel stopped at the start of the pandemic, jobs in the airline industry were cut. But as demand for flights increased rapidly this summer, there were not enough people working in security checks, air traffic and border control.

Air travelers continue to experience baggage handling errors, delayed flights and, more recently, for travelers coming to Canada, a return of COVID-19 testing.

Worried Travelers

Demand for international travel has been hit, with more than 60% of Canadians reconsidering their travel plans because they feared an interruption to their vacation abroad.

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But there is even greater disruption on the horizon in Canada that is unrelated to the current problems. A number of structural changes in the commercial aviation market that have occurred recently or are expected to occur over the next 12 months will lead to further travel disruption as airlines reconfigure in the face of competitive and operational turbulence .

WestJet’s announcement of a strategic retrenchment in Western Canada is a sign that Canada’s newest ultra-low-cost carriers (known in the industry as ULCC) are having an impact on the home market from WestJet in Alberta.

New low-cost airlines

Flair and Lynx, two ULCCs based in Alberta, each plan to deploy 50 new aircraft. This will require WestJet to respond with significant capacity and pricing initiatives to maintain its strength in Western Canada.

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Eastern Canada will see the emergence of Porter Airlines as a bigger player when it begins receiving the first of 50 state-of-the-art Embraer jets to be deployed in major North American markets, primarily to from Toronto Pearson Airport. Porter currently flies smaller planes from Billy Bishop Airport in downtown Toronto, a service it will maintain while the airline starts its Pearson operations.

While Porter appears to be targeting Air Canada with this strategy, there is an additional complication for Porter that starts with Pearson.

Limitations at Pearson Airport

Pearson is what is known as a slot-controlled airport, which means there are limits to the number of landings and departures that the airport can accommodate. These slots are granted to airlines on the basis of historical operating rights. New carriers must apply for slots to fit their scheduled operations – and rights are only granted if the requested slots are available.

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With increased airline capacity at Pearson in the spring of 2022, carriers operated significantly more flights to existing and new markets and consumed available slots.

Given that these slots will now be grandfathered from current airlines – and with a paltry number of available slots remaining commercially acceptable – any new entrant to the Pearson market will face significant challenges in securing marketable operating times. Canada’s two newest ULCCs, Flair and Lynx, are already struggling to run national operations during prime time.

Considering Porter’s plans to base its fleet of 50 to 100 planes at Pearson, the resulting flight schedule would most certainly add to the congestion travelers have experienced in recent months. And certainly Porter’s facilities and schedule will attempt to mirror those offered by current Pearson carriers.

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Porter’s dilemma

This will be Porter’s dilemma: will there be enough commercially viable facilities and niches for them to operate a competitive product from Pearson? Will Pearson’s infrastructure — the operation of terminals and aircraft, as well as traffic control — be taxed beyond what we have seen at Pearson in recent months?

While there are many safeguards in the Canadian air travel market, such as air passenger rights, it is likely that access to the airport – particularly to Pearson, Canada’s air travel hub – will be front and center as emerging carriers look to expand their services.

The evolution and survival of Canada’s commercial aviation industry will be tested – and may require governments to provide additional consumer-focused oversight of Pearson’s slot allocation to ensure fair access to new carriers.

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John Gradek does not work for, consult, own stock or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond his academic appointment.

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This article is republished from The Conversation under a Creative Commons license. Disclosure information is available on the original site. Read the original article: https://theconversation.com/coming-changes-to-the-canadian-airline-i https://theconversation.com/coming-changes-to-the

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