Good morning.
First, I would like to thank the members of the committee for inviting me this morning to share with you my thoughts on the topic being studied.
I fully agree with Mr. Gradek's remarks.
As you know, we professors are used to discussing a topic for three hours, so I'll deviate from my text a little because I can't do it in five minutes.
I'd like to touch briefly on three themes: Canada's domestic market—Mr. Gradek spoke at length about this—regional transport and airports, my favourite subject that I'd like to say a few words about.
First, let's talk about Canadian domestic transport. For as long as I can remember, there's always been, essentially, Air Canada. For a long time, there was also a second carrier based in the west, Canadian Airlines International. The two competitors merged in the early 2000s.
Initially it was a bit of a forced marriage, but that merger later opened the door to WestJet, which was launched in 1996 as a low‑cost carrier. WestJet enjoyed phenomenal growth between 2000 and 2016. In fact, its market share rose from 6% to 41%. This has obviously interested a lot of new players, who have decided to become low‑cost carriers as well.
Then the Jetsgos of this world got into the game, which had a rather tragic end. Even Air Canada launched its Tango service and Zip subsidiaries. Everyone wanted to take over the low‑cost carriers.
Lastly, WestJet itself realized the limitations of this model, because there are very few city pairs in Canada capable of supporting the presence of a discount carrier with aircraft like the Boeing 737. The market makes this Southwest Airlines model of low‑cost, short‑haul, point‑to‑point service very difficult to replicate in this country.
To grow, WestJet has had to open up to new markets and move into international ones, away from the conditions for success of low‑cost carriers.
Today, new players are in the market, but we see that they are experiencing difficulties. These new players include Lynx Air and Flair Airlines, which continue to offer services. Porter Airlines is also looking for market share in certain niche markets.
Air Canada maintains its dominant position today. WestJet has lost almost 10% of the market to other carriers.
I'll now briefly address the issue of regional competition. The situation is even worse because the small number of passengers obviously means that carriers will use smaller aircraft, which means higher costs per seat. If there is difficulty filling the aircraft, the cost per passenger is higher, so fares are higher overall.
Countries around the world are realizing this problem and have set up programs to help. This is the case in the United States, Australia and Europe. In Canada, there are no assistance programs, but there were during the pandemic. In Quebec, the provincial government chose to set up an assistance program to reimburse a percentage of the price of airline tickets and offer subsidized tickets, if you will, for leisure travellers or tourists from major cities.
I would like to close with a word about airports. We sometimes wish that low‑cost American carriers would come and offer some competition to enable our travellers to get to American destinations. However, we often learn that these carriers are somewhat reluctant to come to the country because of all the taxes that are applied and the high fees, particularly at airports.
Members of the committee, I think it's time for the government to take another look at airport governance. We realize that airport improvement fees are constantly increasing, that infrastructure and project costs and future investments are enormous. I think the government should take another look at its intervention model.
The airport authorities have perhaps been given a little too much leeway, and it's time to review their leases.
If you would like more details, you will find them in abundance in my latest book, which is on the subject.
I will be pleased to answer any questions you may have.
Thank you.