Reader @WorthTheJetLag asks on Twitter: “Why are domestic flights so expensive?” The Globe’s Airline Industry reporter Greg Keenan has your answer:
Airline fares in Canada have generally been falling in recent years, but look high when compared with what Americans pay. Fares vary by route, but examples from two Canadian and two U.S. airline websites show the effect of competition and demand, two of the key reasons why Canadian fares are higher.
On one of the highest-demand routes in Canada, Toronto-Ottawa, Air Canada runs 16 flights a day. A return flight at Air Canada’s cheapest rate, booked for May 4, costs $220.
On New York to Washington flights, which are a roughly equivalent U.S. route, the return fare on American Airlines, also on May 4, is $183 (U.S.). American runs 19 non-stop flights a day to Washington out of the two main New York airports.
That’s not a huge difference from the Toronto-Ottawa Air Canada fare, given that there is much higher demand for the New York-Washington flight and American faces more competition on that route than Air Canada does on the Toronto-Ottawa run.
There’s a sharper contrast on longer-haul flights. A WestJet flight from Vancouver to Montreal booked for May 4 with a return date of May 8 would cost $614.90 (Canadian).
A Delta return flight between Los Angeles and Boston on the same days carries a fare of $326 (U.S.).
That underlines another factor that keeps Canadian fares higher – geography. Airlines in Canada are serving a small population spread out in a relatively thin line in a giant country. The U.S. market is roughly 10 times the size of Canada’s with high demand on many routes. Consumers benefit from fierce competition between four major domestic airlines and several low-cost carriers.
Taxes and fees are also higher in Canada.
There are at least two groups trying to start up low-cost airlines in Canada. If they are successful that should help bring down Canadian fares.