European Discount Carriers Shaking Up The Canadian Market

GlobeandMail

Air Canada and WestJet are coming under attack by two international ultra-low-cost airlines which have recently announced service to Canada. Will this mean the proliferation of European-style discount prices in Canada?

As outlined by The Globe And Mail -- this past winter, two European ULCCs announced they would launch direct service to and from Canada. The pair are Norwegian Air Shuttle and Level, the discount unit of colossal IAG, which owns British Airways, Spain's Iberian and other international carriers.

Domestic competition in Canada is also threatening to shake up the AC/WS near duopoly.. In June, Edmonton-based Flair Airlines more than doubled its flights per week and is planning to introduce low-cost service to Las Vegas this fall. With new rivals on both the domestic and international fronts, WestJet fired back by launching its own ULCC, Swoop.

“Why would you sit back and let someone else eat your breakfast?” says WestJet CEO Ed Sims.

Aviation analyst Robert Kokonis says the arrival of the discount European competitors is part of “the Walmartization of air travel,” a trend being driven by new technology and business models that address Canadian consumers' long-held problem with our airlines: high prices in a market run by a few, protected companies.

Canada has remained separate for a variety of reason, the leading being airline operation and start-up costs, sparse population, and massive geography mean that ULCC airlines are a difficult proposition.

But as more established foreign ULCCs begin to move in, it seems that discounts for Canadian flyers may be here to stay, and their presence has already resulted in noticeable fare reductions. 

In a survey of round-trip economy airfares this past summer, Kayak found the average prices to be the lowest in three summers. Comparing the numbers with past launches of low-cost invaders, it certainly feels like things are different this time around.




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