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DESTINATIONS Canada


Marketing Canada to the world On the face of it, there is much to be excited about in the Canadian aviation market. Some 86% of Canada’s international visitors arrive by air, according to Destination Canada. It is no surprise therefore that the tourism marketing organisation has entered a three-year partnership with Air Canada, the country’s dominant airline. Under the agreement, the partners


will collaborate on strategic marketing initiatives and events aimed at travel trade, consumer markets and the media. David Goldstein, Destination Canada’s


president and CEO, believes the timing of the deal is perfect, coming right before the country’s anniversary, and following international recognition of Canada as a premier tourism destination by Lonely Planet and National Geographic. The world, he suggests, “needs more Canada”. Air Canada is doing its best to come good on that idea. It recently added six new destinations to its international network for the summer 2017 schedule. Toronto will benefit from Mumbai and Berlin services, Montreal is adding Algiers and Marseille to its departures board,


The main cause of high airport fees is the annual lease payment demanded by the federal government following the devolvement of major airports from central control in the mid-1990s. As this is set as a hefty percentage of annual operating revenue, rather than a fixed rate, it always takes a sizeable chunk of an airport’s budget. The deal is under discussion but given the lukewarm feedback following a recent Canadian Transportation Act review, it seems unlikely that airports will be let off the hook to any significant extent. Airlines are also being hit by the struggling Canadian economy, which is driven by the energy sector. When the oil price goes down, so does the Canadian dollar. And that means that many of the US dollar- based costs go up.


High costs


while the Vancouver network will include Taipei and Nagoya. “Toronto-Mumbai is our third route between Canada and India, and Nagoya will be our fourth airport in Japan,” says Benjamin Smith, president, passenger airlines at Air Canada. “With these new


services, we will now operate 21


routes between Canada and Asia, including the Middle East. Berlin and Marseille will bring the number of European routes we serve to 44 next summer, including four cities in France. Algiers will be our second destination in Africa, which makes Air Canada one of only a small number of global carriers flying to all six inhabited continents.” The Mumbai and Taipei routes will


operate year-round using a Boeing 787-9. The other, seasonal routes will be operated by Air Canada’s low-cost subsidiary, Rouge, using a Boeing 767-300ER. WestJet, the other major player in the Canada market, meanwhile serves about 150 destinations in 20 countries. The 20-year-old airline reported an 80% load factor for November 2016, with revenue increases exceeding capacity expansion. It is expecting to take delivery of its first Boeing 737 MAX in the summer and has also established its own offshoot, WestJet Encore, which flies Bombardier Q400s domestically. Air Canada and WestJet combined


control some 85% of the domestic market, although new entrants are aiming to change that dynamic. NewLeaf is an innovative reseller of seats, for example, and has partnered with Flair Airlines to connect smaller Canadian airports.


Strict controls


But one of the major issues with Canadian aviation is how difficult it has been for a start-up to gain a foothold. Bill Franke, co-founder and managing partner of Indigo Partners – which is behind such ultra-low-cost airlines as the US-based Spirit – noted last year that there “is no low-cost or ultra-low-cost airline in Canada, zero, none”. The problem, he said, was the foreign ownership rule that limits the proportion of an airline being held overseas to just 25%. Given the enormous start-up costs, there simply isn’t the appetite domestically to risk funding the remaining 75%. That could be about to change.


WestJet and Air Canada control 85% of the domestic market


44 ISSUE 1 ROUTES NEWS 2017 routesonline.com


Marc Garneau, the Canadian federal government’s minister of transport, announced late in 2016 that the cap on foreign ownership of Canadian airlines will rise from 25% to 49%. While waiting for that to be implemented, two exemptions


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