Canadian Competition Watchdog to Examine Airline Industry

Canada’s Competition Bureau is preparing to launch a major review of the country’s airline sector.

On Monday, the agency said “recent events have raised questions about the state of competition in the industry.” It noted that Canada’s domestic market is dominated by just two major airlines – Air Canada and WestJet. It is estimated that the pair account for almost 95% of industry revenue.

Official figures show complaints from passengers have risen in recent years, with the watchdog further highlighting that new entrants to the sector “appear to face challenges.” 

In late February, budget carrier Lynx Air collapsed. The airline was launched in 2022 in an attempt to shake up the sector. Lynx was the latest in a series of largely unsuccessful attempts to penetrate the market in recent years. 

While Toronto-based Porter Airlines is a notable exception, it remains a relatively small player.

What’s the Scope of the Study?

The market study format allows the agency to examine a sector to identify factors that may impede competition. 

The bureau said the investigation will allow it to better understand the root causes of the challenges within the industry. Ultimately, it will make recommendations “to all levels of government” to improve competition in the sector. 

The agency has opened an initial public consultation. Once this concludes, its final terms of reference will be published and the study will formally begin.

The bureau stressed that it is not examining any specific allegations of wrongdoing. However, the watchdog could investigate and take action should it “uncover any evidence during the study that the Competition Act has been contravened.”

In a statement, Matthew Boswell, Canada’s Commissioner of Competition said: “Since the Canadian population is spread out over vast distances, other modes of transportation may not be feasible replacements for air travel. More competition in the industry will mean lower prices, better services, and improved productivity.” 

There were 72 million passengers carried on Canadian domestic flights in 2022.

What Do the Airlines Say?

In response to the developments, a WestJet spokesperson told Skift: “WestJet recently put forth three practical recommendations to immediately improve affordability and competition. As the airline that democratized air travel in Canada, we are committed to meeting the diverse needs of our guests and the communities we serve. Air travel is essential to our country and we welcome interest from all groups as we continue to focus on bringing more affordable and innovative travel options to Canadians.”

Air Canada told Skift it is reviewing the terms of reference provided in the draft market study notice. As this remains subject to consultation, the company said it was unable to comment directly on Monday’s developments. It did however highlight a recent competition presentation made by the airline to a Canadian parliamentary committee.

The Competition Bureau, which is an independent law enforcement agency, aims to publish its findings in June 2025. 

This story has been updated to include a response from Air Canada.