Canada does have an affordable airline ticket issue. But public airline bashing isn’t the answer, the head of WestJet told federal politicians in a highly publicized hearing.
Speaking in front of a House of Commons committee in Ottawa on 13DEC, WestJet CEO Alexis Von Hoensbroech said it's easy for politicians to be "bashing airlines" because the affordability crisis is real. But he said if the federal government really wants to lower the cost of air travel, significant reforms to the system are needed, including lower taxes and fees, which sometimes cost $100 for a single ticket.
"The way [the air travel industry] is being governed actually has created a sky-high cost structure at a below-average infrastructure [level]," he said.
The hearings were demanded by Transport Minister Anita Anand, who was angry when Air Canada last week matched WestJet and Porter by introducing a new basic economy fare which bans carry-on bags. The new fare comes into place 03JAN, 2025.
The Players
Air Canada CEO Michael Rousseau and other Air Canada executives were given their own one-hour time slot. The heads of WestJet, Air Transat and Porter were grouped together for a separate hour of questions.
Rousseau pointed out that MPs only began to scrutinize the banning of carry-on after Air Canada announced its decision, even though other airlines already had fares of the same kind.
"Similar fare structures at other carriers have not raised concerns from Parliament," he said.
Von Hoensbroech said members of the buying public aren’t being hoodwinked by basic fares.
"It's a choice,” he said. “Everyone who buys this knows [it doesn't include a carry-on bag]. This is not a surprise, this is something someone deliberately chooses.”
Airline executives told MP’s that basic category airfares that don’t include a free carry-on bag are extremely popular and fill a need for lower-cost air tickets.
In a remote presentation, Porter Airlines CEO Michael Deluce told the committee Porter introduced its Basic Fares in 2018 and now have six types of economy fares with varying benefits.
“Basic is the second-most popular fare we offer based on the number of seats sold,” he said, adding that roughly 20% of consumers buy that fare.
Of those Basic Fare pax, less than one-third pay to check a bag, and only about eight per cent elect to upgrade their ticket to include a carry-on bag to go along with a personal item.
“Our Basic Fare clearly provides a benefit to consumers who do not intend to bring a carry-on bag to save on their base fare,” Deluce said.
“Basic economy fares have made air travel more accessible for Canadians and an affordable option for millions of passengers globally, allowing airlines to introduce competition on a scale never seen before,” he said. “In North America, every airline of note offers a version of Basic Fares, from Ultra Low-Cost Carriers to global network carriers.
WestJet earlier this year introduced its “UltraBasic” fare, which also allows only a personal item under the seat and requires customers to pay for seat selection. The carry-on policy does not apply to UltraBasic fares on transpacific and transatlantic routes.
Lower Fares
Rousseau, speaking via video conference call, told committee members that the cost of airline tickets in Canada has dropped dramatically in the past two decades.
“(There is) no doubt that this increased competition has driven airfares down. Since 2011, as an analysis by InterVISTAS based on data from Saber shows, the average fare in the domestic market has been reduced by about 20% in constant (adjusted for inflation) dollars. In the same period, the number of domestic passengers has increased by about 27%,” he said.
“More people travel, and people pay less for their ticket. As a reminder, the average domestic fare had already gone down about 35% in constant dollars between 1990 and 2011, according to Statistics Canada.
“Today, Air Canada offers a range of fare options tailored to different preferences, including or not services such as checked baggage, ticket changes, refundability, and onboard meals,” Rousseau said. “Our recent change to Air Canada’s lowest fare, the Basic Fare, which no longer includes carry-on baggage, represents another step in this direction.
“With online tools and price comparison platforms … consumers can readily identify the lowest fares available. True competition requires companies to respond to market forces. This is exactly what we are doing,” Rousseau added.
“We are aligning our lowest fare policies with those already offered by our competitors, WestJet, Porter, and Flair, to be in a better position to compete for price-conscious customers.
WestJet’s von Hoensbroech said WS has cut air fares in half, and done so at a time when government fees and taxes have risen by two-thirds.
More than a million WestJet customers have chosen Ultra Basic fares, he said, which are, on average, 14% cheaper. The fare also has allowed WS to avoid carrying some 1.2 million bags, which has cut delays by 54%.
In a letter sent to committee members on 12DEC, 2024, von Hoensbroech said airlines can’t solve the problem of airfare costs alone.
Third Party Taxes
“Our efforts have been undermined by government policies and third-party fees and taxes, which have risen by 65% since 1996. Today, before travellers even buy their tickets, taxes, fees, and charges can add up to $99 per ticket—costs that are neither optional nor transparent,” he wrote.
“These hidden fees, including navigation, security, and airport improvement charges, make Canadian air travel among the most expensive globally—more than triple the fees in the U.S.”
WestJet also called for a freeze on further cost hikes for airlines and asked Ottawa to stop collecting rent from Canadian airports.
"Currently, taxes and government-imposed fees represent about 30% of the average domestic fare," Rousseau told the committee. "If these fees are lowered, this will make a tangible difference for people traveling in Canada."
