The Canadian Airline Industry

INTRODUCTION

An airline is an organization providing aviation services to passengers and/or cargo. It owns or leases airlines with which to supply these services and may form partnerships or alliances with other airlines for reasons of mutual benefit

The scale and scope of airline companies ranges from those with a single airplane carrying mail or cargo, through full-service international airlines operating many hundreds of airplanes in various types. Airline services can be categorized as being intercontinental, intercontinental, regional or domestic and may be operated as scheduled services or charters.

Canada's domestic airline industry has evolved from being an Air Canada monopoly to a virtually deregulated industry where the market is open to any carrier who can obtain an operating license and pass a financial fitness test. This environment came about in response to pressure from carriers for less government regulation to allow them to better compete in the domestic marketplace. To this end, the government passed the National Transportation Act in 1987, which brought about the economic deregulation of Canada's domestic airline industry.

Air Canada consolidated its position by becoming a privatized corporation in 1988, thereby allowing it to compete without the constraints of being a Crown corporation, including the need for government approval of corporate and financial plans. It also acquired regional airlines, further strengthening its position

The Canadian Airline Market

• Air Canada has always been the largest carrier, initially as the publicly owned carrier, with exclusive rights to serve domestic markets, and latterly, since relaxation of entry and pricing restrictions, by success over domestic competitors. With the acquisition of Canadian Airlines International, Air Canada moved from the 18th to the 12th largest passenger airline in the world and the 7th largest in North America.

The other major development in the domestic market has been expanded service by medium-sized carriers. West Jet, Western Canada's discount carrier, which began operations in February 1996 and has recently extended its services into Eastern Canada, has been Canada's fastest growing and most financially successful independent carrier.WestJet has made enormous strides over the last few years, increasing to a 14.16% share from 4.26% of the market between 2002 and 1999. Low fare service, including Tango, is booming - 36% in summer 2002 from 16% in 2003. The largest independent is Canada 3000, a 12-year-old airline that has gone from being a charter