Canada’s next LCC strives toward lower fares
The civil aviation industry in Canada is thought of not having an option for low-cost carriers (LCC) or ultra-low cost carriers (ULCC) due to high airport and security fees, cap on foreign investment and lower competition within the industry.
Canada currently charges around a municipality tax of $25 per pax. In addition, high operations cost is also one of the reasons of the high ticket fare. There are only two major airlines dominating the Canadian market, Air Canada and WestJet Airlines. Other airlines also exist in the country for charter business such as Enerjet, while the only ‘ULCC’ in the country, Jetlines, is still trying to raise more capital to fly its fleet.
A report reviewing Canadian Air Transport management in 2015 concluded that air travel in the country is “marked by weak accountability constraints on fees and charges; high costs for users and operators; aggressive capital expenditure programs at airports; modest traffic volumes; and limited competition.” The report recommended the authorities to reform the airport ownership structure and offer the aviation industry more federal financial aid. The report mentioned the US as a good example for implementing the aid model.
Jetlines, which plans to expand its fleet and list shares publicly, is offering 30% cheaper fares than the existing major airlines. At the same time, Enerjet is also looking forward to establishing its scheduled fleet.
The most realistic funding of this plan is to get international funding, the foreign investment, as recommended by the 2015 report. The government’s policy for 25% cap on foreign investment now challenges local companies such as Enerjet and Jetlines. Both have been reported to ask the government to be exempted from the country’s cap on foreign investment.
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